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Latest insolvency figures show mixed fortunes for Scottish business sector KPMG says latest figures show there are signs of the insolvency market levelling out

Figures released today (19 April, 2011) by professional services firm KPMG show the total number of Scottish corporate insolvency appointments fell by 12% (from 321 to 282) in the first quarter of 2011, when compared with the same period the previous year.

The statistics also show the number of liquidations, administrations and receivership appointments made in Scotland rose by 17.5% between January and March 2011 compared with the previous quarter, with 282 appointments this quarter compared with 240 in Q4 2010.

Comparing the Q1 2011 figures with Q1 2010 the figures illustrate a marked drop in the number of liquidations, which typically affect smaller companies, while the number of administrations and receiverships is slightly down on the same period last year. However the numbers have risen across all categories when Q4 2010 is compared to Q1 2011, which may be partly explained by the difficult trading conditions experienced during the winter months.

Commenting, Blair Nimmo, head of restructuring for KPMG in Scotland, said:

“The figures make for mixed reading but may show signs for longer term confidence. The headline figure for the first quarter of 2011 compared to 2010 highlights a 12% drop which is good news as we look at longer term trends. Many companies seem to have avoided the worst by taking early action through cutting costs and preserving cash and have adopted a cautious approach to business strategy.

“However we can’t ignore the fact insolvencies rose by 17.5% over the last two quarters which highlights the fact we are still living in uncertain times. The vast majority of the insolvencies have affected relatively small businesses and in many cases represent companies which have closed some time ago. Relative to the overall number of companies in Scotland and new starts the numbers are still quite small and are far less than would have been expected at the outset of the recession.

“Given recent tax increases, the cycle of spending cuts and the overall state of the economy in terms of retail sales, inflation and the prospective increase in interest rates, the big question is whether we are simply seeing the calm before the storm?”

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