Scots company failures rise, with more to come

By Peter Ranscombe
Published on Saturday 4 February 2012 00:00

A RECORD number of Scottish companies went bust last year and experts yesterday warned of even higher failure rates.

Figures released by the UK government’s Insolvency Service showed 1,526 businesses fell into administration, liquidation or receivership in 2011 – the equivalent of four each day.

Analysts blamed a lack of bank lending, public sector cutbacks and weak consumer spending for the rise in insolvencies.

In the final three months of the year alone, 385 firms went to the wall, including 290 liquidations.

Matt Henderson, a corporate insolvency partner at accountancy firm Johnston Carmichael, said: “The prevalence of liquidations is a concern because, unlike other types of insolvency such as administration, it is not designed to save businesses.”

Data on Scottish liquidations and receiverships was released last week by the Office of the Accountant in Bankruptcy, but the Insolvency Service figures added in details of which sectors have been affected.

Bryan Jackson, a corporate recovery partner at accountancy firm PKF, said: “Property-related businesses continue to fail at a disproportionately-high level, whilst squeezed discretionary consumer spending is resulting in the hospitality sector also being hit.”

Graeme Henry, head of corporate recovery at law firm HBJ Gateley, added: “This is probably the thin end of the wedge for insolvencies. These figures suggest there is still some significant pain in front of us as the economy recovers.”

PETER RANSCOMBE

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