Scotland insolvency statistics Q3 2022, R3 in Scotland response

25 January 2023

• Overall, corporate insolvency numbers (liquidations and receiverships) in Scotland for Q3 2022-2023 increased by 13.3% compared with Q3 2021-2022.
• The number of corporate insolvencies (liquidations and receiverships) in Scotland for Q3 2022-2023 increased by 0.7% compared with the previous quarter (July-September 2022).
• Overall, personal insolvency numbers (bankruptcies and protected trust deeds) in Scotland for Q3 2022-2023 decreased by 4.9% compared with Q3 2021-2022.
• The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland for Q3 2022-2023 decreased by 5.2% compared with the previous quarter (July-September 2022).

Commenting on the Scottish Insolvency Statistics, Q3 2022 (1 October 2022 to 31 December 2022), Richard Bathgate, Chair of insolvency and restructuring trade body R3 in Scotland and Restructuring Partner at Johnston Carmichael, said:

“The quarterly and yearly rise in corporate insolvencies has largely been driven by an increase in compulsory liquidations, which have increased by 72% from the same time last year.

“This suggests that companies across the supply chain are feeling the pinch and that creditors are now prepared to take the legal route to recover the debts they are owed, perhaps in order to pay their own bills and satisfy their own creditors.

“There’s a feeling of real uncertainty in the Scottish business community at the moment. With talks of recession, low consumer confidence and rising costs, a lot of directors aren’t confident about their prospects for the year ahead, which is likely to be full of the same persistent challenges faced since the pandemic ended.

“While consumer spending went up over the festive period, the boost wasn’t enough for every business, with the extra income offset by rising fuel, rent and raw material costs.

“With Christmas now out of the way, people are really looking at how they can cut back on their spending so while all sectors are under immense strain, it’s likely we’ll see businesses in retail, hospitality and other sectors that are dependent on discretionary spending struggle this year.

“It’s been a volatile couple of years, but we aren’t out of the woods yet. As we move into 2023, firms need to consider their situation, prepare for what’s on the horizon and act if they run into cashflow problems, issues with paying staff, rent or taxes, or see their stock start to pile up.

“When it comes to personal insolvency, the quarterly and yearly fall has been driven by a drop in all forms of personal insolvency processes - with bankruptcies falling 10% from Q3 last year.

“This suggests that the cost-of-living crisis has yet to translate into an increase in personal insolvencies, but despite the fall in numbers, rising food prices, rent and mortgage costs are still huge pain points for people in Scotland who are finding themselves paying significantly more each month on just the everyday essentials.

“Prices at the pump are starting to come down, but consumers are still battling against sky-rocketing household energy bills – an issue which is only set to get worse in March when the energy support scheme comes to an end.

“The true impact of rising interest rates on mortgage payments remains something of an unknown but is likely to add to household woes as existing mortgage products come to an end forcing customers onto products with higher rates.

“There’s a real danger that people will begin to turn to credit options to cover these rising cost pressures, and that we’ll see more and more people driven into problem debt, and more vulnerable to the kind of unexpected shocks that can lead them to become insolvent.

“To anyone in Scotland facing money worries – whether business owner or individual – it’s important that you don’t keep your concerns to yourself and seek advice as soon as you can. It may be easier said than done, but by opening up to a professional about your concerns, you’ll have more potential options and more time to take a considered decision about your next steps.

“Most R3 members are more than happy to sit down for a free initial consultation to discuss your concerns and outline the potential options for improving your situation.”