Corporate and personal insolvency levels fell in Scotland in Q3 2024-2025 compared to Q3 2023-2024, according to insolvency and restructuring trade body R3 in Scotland, citing new data from Accountant in Bankruptcy.
“Corporate insolvency numbers (liquidations and receiverships) in Scotland for Q3 2024-2025 decreased by 2.4% compared with Q3 2023-2024, to a total of 285,” said R3 in Scotland.
“The number of corporate insolvencies (liquidations and receiverships) in Scotland for Q3 2024-2025 decreased by 8.9% compared with the previous quarter’s total of 313 (July-September 2024).
“Personal insolvency numbers (bankruptcies and protected trust deeds) in Scotland for Q3 2024-2025 decreased by 11.4% compared with Q3 2023-2024, to a total of 1,784.
“The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland for Q3 2024-2025 decreased by 6% compared to the previous quarter’s total of 1,897 (July-September 2024).”
Richard Bathgate, chair of insolvency and restructuring trade body R3 in Scotland, and a Restructuring Partner at Johnston Carmichael in Aberdeen, said: “While corporate insolvency levels in Scotland have fallen compared to last quarter and last month, the make-up of the figures has changed significantly and suggests that the Scottish insolvency landscape is very different to how it was three and 12 months ago.
“This quarter’s figures have largely been driven by a sharp increase in the number of solvent firms being wound up and by a rise in creditors turning to winding up orders to chase the debts they are owed.
“Member Voluntary Liquidations (MVL) have increased over the last three months to the highest level since the last quarter of the 2020-21 financial year.
“This suggests that directors of solvent firms are choosing to wind up their companies, perhaps ahead of the Employers’ National Insurance and National Minimum Wage rises being introduced in April, which we know will be a financial blow for many businesses.
“The rise in compulsory liquidations suggests that over the last three months creditors have become more willing to pursue the debts they are owed, and this is likely to be in an attempt to help manage their own outgoings and meet their own payment deadlines as businesses across the economy feel the pinch of rising costs and a customer base that is becoming wary of spending on anything that isn’t essential.
“Looking ahead to this year, Scottish businesses have entered 2025 facing a mix of challenges and opportunities. While economic conditions have shown signs of recovery compared to the past two years, rising costs continue to put pressure on companies across the board.
“Scotland’s retailers saw a slight boost over the festive period, with sales edging up compared to December 2023. While Black Friday and Christmas spending brought some wins, the crucial golden quarter remained flat, a clear sign that household budgets are still stretched, and consumers are finding ways to cut back wherever they can.
“Business confidence is slipping as many firms brace themselves for the impact of the Budget. While some positive measures were announced, the rise in minimum wage presents a fresh challenge, particularly for businesses in sectors like hospitality and retail.
“Already operating on tight margins, these businesses face higher labour costs at a time when they can least afford it and could push some to the brink.
“The increase in employer NIC is another significant concern for businesses, particularly in sectors with lower-paid staff. After years of price increases, it will be difficult to pass on these additional costs to customers, and we may see businesses forced to make tough decisions, choosing to scale back or reduce staff numbers.
“When it comes to personal insolvencies, the overall year-on-year and quarterly decrease in numbers has been driven by a reduction in Protected Trust Deeds.
“However, while Bankruptcy numbers have fallen slightly compared to this time last year, they have risen compared to last quarter, which suggests that there has been an increase in the number of people with high levels of debt turning to an insolvency process for help …”