Fewer companies going under

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THE number of companies going bust in Scotland appears to be easing from last year’s record highs, but an increasing proportion are tumbling straight into liquidation, rather than seeking other means of salvaging the business.

KPMG figures show that 268 Scottish firms fell into insolvency in the first quarter, but this was down 20 per cent on the final quarter of 2011 and 5 per cent on the corresponding period last year. However, nine in ten (89 per cent) went straight into liquidation in the first quarter, against 85 per cent in the previous quarter and 82 per cent a year ago.

Over the year to the end of March 1,276 companies went bust, of which 87 per cent were liquidated, against 79 per cent in 2008-09.

The figures suggest that small firms have been bearing the brunt of the economic downturn.

Blair Nimmo, head of restructuring for KPMG in Scotland, said the figures offered “some signs of positivity” in what he predicted will be a drawn-out economic recovery. “Since 2008, while property and construction-related businesses have suffered badly, most other sectors have performed relatively well despite less-than-helpful economic conditions,” Nimmo said.

“I believe this is because businesses have placed more focus on careful cash management and the need to take cost out of their operations, with very little in the way of transactions. Until there is clear evidence of a sustained economic recovery, I believe this trend among businesses will continue.”