Corporate insolvencies in Scotland hit an 11-year high in 2022-2023 while personal insolvencies also increased on the prior year, according to new figures published by Accountant in Bankruptcy.

There were 1,132 corporate insolvencies in 2022-2023 — an increase of 32.6% from 2021-2022’s figure of 854, an increase of 157.3% on 2020-2021’s figure of 440, and a rise of 19.4% compared to pre-pandemic levels in 2019-2020 (948).

There were 8,004 personal insolvencies in Scotland in 2022-2023 — an increase of 3% on 2021-2022’s figure of 7,769, a rise of 5.3% on 2020-2021’s figure of 7,600 but a fall of 40.7% compared to pre-pandemic levels in 2019-2020 (13,491).

Richard Bathgate, chair of insolvency and restructuring trade body R3 in Scotland and Restructuring Partner at Johnston Carmichael, said: “The Covid hangover continues to hit Scotland’s businesses hard, with the figures published today showing that corporate insolvency numbers are at their highest level in a decade.

“Creditors’ Voluntary Liquidation levels rose once again – to nearly double 2019’s figures, and to the highest levels on record.

“This suggests that more and more company directors are choosing to close their businesses before that choice is taken away from them, and that businesses who made it through the pandemic with support from the Government are considering whether the debt they’ve taken on is sustainable.

“I would urge any director concerned about Bounce Back Loan repayments or other COVID-related loans to talk to their lender about what additional support options may be available.

“However, the figures released today go beyond simply levelling out pre-COVID insolvencies.

“With labour, stock, and energy expenses all surging, even previously successful businesses are now turning to an insolvency process to resolve their financial difficulties.

“For Scottish consumers, uncertainty is high, and in turn, spending is low.

“Most are prioritising everyday essentials over more discretionary categories like beauty, home improvements, and nights out, leaving these types of businesses particularly vulnerable if this continues.

“Though the economy has shown some unexpected resilience so far this year, with a record low of unemployment levels and rising business confidence, I think a further wave of insolvencies is inevitable in 2023 unless the picture drastically improves.

“There are various avenues that businesses will try before an insolvency process, so it can take some time to see the true number of insolvent firms reflected in the statistics.

“It has also been a tough year for individuals in Scotland. There have been more than 1,130 personal insolvencies over the last financial year, driven by a rise in bankruptcies and protected trust deeds.

“The transition from the pandemic to the current cost-of-living crisis has been abrupt, leaving many people financially fragile and struggling to make ends meet.

“For some, a build-up of savings has kept them afloat, while others have resorted to borrowing and credit options, even to cover the essentials which is a huge cause for concern.

“Excessive borrowing can put people in danger of falling into a long-term debt trap that may be difficult to escape, particularly given that the cost of debt is rising in line with higher interest rates.

“The rent freeze introduced last year gave tenants in Scotland some stability, particularly for those on low-incomes and most vulnerable to insolvency. But eyewatering energy bills and food inflation at a 40-year high have limited the impact of these measures.

“Our message is simple: don’t struggle with financial worries on your own, whether you’re a business owner or an individual.

“We know how hard it is to take the first step, but discussing your concerns with a qualified professional at an early stage can provide you with the time you need to make an informed decision about how you resolve your situation.

“The sooner you seek help, the greater the range of options available to you – and most R3 members offer a free initial consultation to help you gain a better understanding of your financial situation and the potential solutions to improve it.”