Scotland insolvency statistics July-September 2021, R3 in Scotland response

27 October 2021

• The number of corporate insolvencies (liquidations and receiverships) in Scotland rose by 29.4% to 211 in July-September 2021 compared with April-June 2021 (163), and rose by 80.3% compared to July-September 2020 (117). 
• Creditors’ Voluntary Liquidations rose to 179 for July-September 2021 – an increase of 35.6% on the 132 recorded for April-June 2021 and of 159.4% on June-September 2020’s figures (69).
• The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland rose by 1.8% to 1,918 in July-September 2021 compared with the 1,885 in April-June 2021, and was 8.4% higher than in July-September 2020 (1,770).

Commenting on the Scottish insolvency statistics for July-September 2021, Tim Cooper, Chair of insolvency and restructuring trade body R3 in Scotland and a Partner at Addleshaw Goddard, says:

“The quarterly and annual increase in corporate insolvencies has been driven by an increase in Creditors’ Voluntary Liquidations. This would suggest that company directors are choosing to close their businesses, having deemed their future success unlikely after trading for more than a year and half during a pandemic.

“The figures published today reflect the tough three months Scotland’s business community has experienced. Restrictions lifted in August, but it has taken time for trade to pick up and will be a while before it returns to pre-pandemic levels.

“Businesses have also faced supply chain disruption, and international trade has been affected by both the pandemic and the change in our relationship with the EU.

“UK Government initiatives like the furlough scheme have helped many, but we now face a difficult period where they have to manage without it while trading conditions haven’t returned to normal. This could make for a challenging three months in the run up to Christmas.

“Given the circumstances, it’s no surprise that business optimism is softening, and many directors are concerned about the future and how they’ll pay their overheads and taxes.

“When it comes to personal insolvency, the quarterly and annual increases have been driven by a rise in Protected Trust Deeds. This suggests that more people are working with their creditors to resolve and repay their debts, without reverting to bankruptcy – and is supported by the fact that bankruptcy numbers in Scotland fell compared to the previous quarter and this time last year. 

“It’s also worth noting that the number of people entering a moratorium in Scotland increased dramatically this quarter. This indicates that there’s been a significant rise in the number of people who are facing or approaching serious financial difficulty.

“While this is concerning, there is a positive from this: more people are taking steps to identify their options, and doing this free from creditor action may give them the space to come to a more considered course of action for resolving their financial issues.

“To anyone who is worried about their finances, our message is simple: seek advice – and do it at the first signs of trouble. Having a conversation about your money worries – whether they’re personal or business – is hard, but doing so as early as possible will give you more options for resolving your situation, more time to decide which of those is right for you, and a better chance of turning your situation around than if you’d waited and the problem had spiralled.”

ENDS