Business failures drop as lenders ease pressure

THE number of Scottish companies going bust plunged in the first three months of the year and the numbers on the “critical list” halved as creditors and the taxman changed tack by cutting firms some slack.

Official figures from Scotland’s insolvency service, Accountant in Bankruptcy, show 143 firms went under during the three months to March – down 63 per cent year-on-year.

Personal insolvencies were also down. The number of Scots going bankrupt in the first quarter of 2013 fell by 28.7 per cent year-on-year.

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Separate figures from accountant Begbies Traynor revealed the number of companies in “critical distress” halved north of the Border, a bigger fall than that seen across the UK as a whole.

Ken Pattullo, the group’s managing partner in Scotland, said: “The largest influencers on the levels of critical business distress are creditor forbearance, access to funding and HMRC actions, and these have changed over recent years.

“Put simply, when creditors are more patient, the levels of distress tend to fall. This is undoubtedly a factor in the economy at the moment, but is countered to a degree by a climate where business funding is less available than was the case a few years ago.”

But Bryan Jackson, a business restructuring partner with accountant BDO, said the drop in insolvencies does not necessarily indicate a wider recovery.

“This could be good news or simply a sign that demand for bankruptcy has dried up,” he said.