A TOP insolvency accountant has revealed that Scottish corporate failures last year increased significantly from the previous year.
Matt Henderson, Head of Restructuring at Johnston Carmichael Chartered Accountants analysed the most recent insolvency statistics and found that Scottish corporate failures over 2014 increased by 6.2% compared to 2013.
Commenting on the figures, Matt Henderson said: “The total corporate insolvency figures for 2014 show that, on average, there were 18 to 19 corporate failures per week in Scotland. The rise can be attributed to the number of compulsory liquidations, which rose from 450 cases to 649 cases – an increase of over 44 per cent.
“Compulsory liquidations are cases where companies are wound up as a result of a Court order, often after being sued for non-payment of debt, demonstrating that creditors are taking action to recover debt from companies that are unable to pay in full.”
Henderson also noted that the number of bank-led administrations have decreased significantly, down from 151 in 2013 to 89 in 2014, reflecting the approach of banks to support problem debts.
He said: “There is anecdotal evidence to suggest that banks are keen to reach consensual non-hostile solutions rather than appointing an administrator, which is partly due to their efforts to restore confidence in the markets and to demonstrate a positive and supportive approach when dealing with financially distressed situations.
“Overall, the 2014 insolvency figures show that more action is being taken to recover debt by unsecured or trade creditors than secured creditors, like the banks. Whether this trend continues into 2015 remains to be seen, but the prospect of an interest rate rise in 2015 will most certainly increase the pressure on lenders to restructure the debt and equity within distressed businesses.