Number of Scottish company insolvencies falls

The state of the North Sea oil and gas sector is still a concern. Picture: Hemedia

Scottish corporate insolvencies have fallen in the quarter ending 30 September, and while the news has been welcomed, there are fears that many companies, particularly those in sectors like oil and gas, remain vulnerable.

According to statistics released by Scotland’s insolvency service Accountant in Bankruptcy, 180 Scottish-registered businesses became insolvent in the period.

That marks a drop of 13.9 per cent from the year-ago quarter and 8.6 from the previous quarter. No companies entered receivership in the period. Business minister Fergus Ewing welcomed the figures, adding that fewer companies becoming insolvent meant more people could remain in work.

However, Pamela Muir, head of restructuring and insolvency at law firm Morisons, pointed to some causes for concern.

The North Sea oil and gas sector and related businesses remain key areas of anxiety, said Muir, also flagging continued low interest rates, which she said have “contributed to a mood of unreal optimistic expectation”.

Muir added: “The truth is that interest rates have only one way to go and when they rise they will have an impact and businesses need to be prepared for this change.”

Tim Cooper, chairman of insolvency trade body R3 in Scotland, also warned about the impact of an interest-rate rise, but said entering a formal insolvency procedure “doesn’t necessarily equate to permanent financial failure”.

The insolvency profession last year rescued two in five insolvent businesses, Cooper noted.

On Monday the accountancy giant KPMG published a report revealing a year-on-year fall of 30 per cent in corporate insolvencies for the period from July to September.