Scotland insolvency statistics Q3 2023, R3 in Scotland response

24 January 2024

• Corporate insolvency numbers (liquidations and receiverships) in Scotland for Q3 2023-2024 increased by 7.4% compared with Q3 2022-2023, to a total of 292.
• Corporate insolvency numbers in Scotland also increased by 29.2% when compared to pre-pandemic levels in 2019 (226).
• The number of corporate insolvencies (liquidations and receiverships) in Scotland for Q3 2023-2024 increased by 3.2% compared with the previous quarter’s total of 283 (July-September 2023).
• Personal insolvency numbers (bankruptcies and protected trust deeds) in Scotland for Q3 2023-2024 increased by 2% compared with Q3 2022-2023, to a total of 2,014.
• Personal insolvency numbers in Scotland decreased by 39.6% when compared to pre-pandemic levels in 2019 (3,334).
• The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland for Q3 2023-2024 decreased by 3.3% compared to the previous quarter’s total of 2,082 (July-September 2023).

Commenting on the Scottish insolvency statistics, Q3 2023-2024 (1 October 2023 to 31 December 2023), Richard Bathgate, Scotland Chair of R3, the UK’s insolvency and restructuring trade body, said:

“The figures published today reflect a challenging year for businesses in Scotland, with corporate insolvency levels rising again in Q3 after a slight fall in numbers in Q2.

“The quarterly increase in corporate insolvencies has been driven by a rise in both Compulsory Liquidations and Creditors’ Voluntary Liquidations, while the year-on-year rise has been driven by a 26.4% increase in Compulsory Liquidations. This suggests that creditors are now actively seeking to collect debts owed to them, possibly as a response to their own financial difficulties.

“Over the past four years, Scottish firms have grappled with new hurdles round every corner, from high inflation, to soaring energy bills, rising wage demands and low consumer confidence. These issues have pushed corporate insolvencies to well above pre-pandemic levels.

“In November 2023, the traditionally successful Black Friday sales failed to provide the pre-Christmas boost many businesses were hoping for, with retail sales seeing a 1.2% decline when adjusted for inflation. And lacklustre spending continued into the Christmas period, with the cost-of-living crisis giving consumers no choice but to tighten their belts on gifts, food and celebrations.

“Legacy impacts of the pandemic have continued to weigh heavily on sectors that rely on discretionary spending like retail, hospitality, and tourism. The next few months will be key to understanding whether businesses in these sectors have brought in enough income over the festive period to stay afloat, or whether insolvencies will continue to rise into the year.”

Richard, who is a Restructuring Partner at Johnston Carmichael, continues: “Turning to personal insolvencies, the year-on-year increase has been driven by a rise in all forms of personal insolvency process.

“Bankruptcy numbers have risen to a two-year high for Q3 but are still much lower than they were pre-pandemic which suggests that support measures during COVID and beyond have kept individuals in Scotland from seeking out a formal personal insolvency solution for high levels of debt.

“While historically the Christmas period has been a lifeline for businesses, it can be the final blow to people that are grappling with already over-stretched finances. After two years of heightened inflation, many people in Scotland have relied on credit to fund the festive period, while some may still be paying off debt from Christmases past.

“On top of this, consistently high interest rates also mean that the cost of existing debt is only going up, creating a vicious and unsustainable cycle for people struggling with debt, which could translate into a surge in personal insolvencies this coming year.

“When money worries arise, it’s natural for both individuals and business owners to feel the weight of their challenges and be hesitant to seek help. However, avoiding the issue won’t make it go away – instead, it tends to make matters worse.

“Seeking advice from a qualified professional at the earliest possible point opens the door to a host of options for dealing with your financial challenges. But beyond that, it provides the reassurance and peace of mind that your issues are in hand and that you’ve taken steps to address them.

"Most R3 members in Scotland will offer a free initial conversation to potential clients to understand more about your circumstances and discuss the options available for resolving them.”