Scotland insolvency statistics Q2 2022, R3 in Scotland response
Overall, corporate insolvency numbers (liquidations and receiverships) in Scotland for Q2 2022-2023 increased by 28% compared with Q2 2021-2022. The number of corporate insolvencies (liquidations and receiverships) in Scotland for Q2 2022-2023 increased by 10.7% compared with the previous quarter (April-June 2022).
Overall, personal insolvency numbers (bankruptcies and protected trust deeds) in Scotland for Q2 2022-2023 increased by 7.7% compared with Q2 2021-2022. The number of personal insolvencies (bankruptcies and protected trust deeds) in Scotland for Q2 2022-2023 increased by 1.3% compared with the previous quarter (April-June 2022).
Commenting on the Scottish Insolvency Statistics, Q2 2022 (1 July 2022 to 30 September 2022), Iain Fraser, Chair of insolvency and restructuring trade body R3 Scottish Technical Committee, said: “The quarterly and yearly increases in corporate insolvencies, to the highest level since the beginning of 2020, has largely been driven by a rise in the number of compulsory liquidations.
“Compulsory liquidations have risen more than 143% from the same period last year, and the key factor behind this is the end of the temporary legislation that altered the process and criteria for these, in an attempt to support businesses that were affected by the pandemic.
“Supply-chain issues, spiralling inflation, and labour market shortages are all having a huge impact on Scottish firms’ ability to operate successfully, let alone grow, over the last quarter.
“And with further price rises such as the energy cap increase we saw at the beginning of October yet to be factored into the figures, it is likely that we will see corporate insolvencies continue to rise next quarter.
“Scottish business owners need to think carefully about their next steps and plan for all scenarios. If there are issues coming up, like falling margins or overdue invoices, it’s far better to discuss them early when more options are available for finding a solution.
“When it comes to personal insolvency, the quarterly increase has been driven by a rise in the number of protected trust deeds. The year-on-year increase has been driven by a rise in both protected trust deeds and bankruptcies.
“The reality of the cost of living squeeze means more people are turning to insolvency processes to improve their financial situation.
“Amid soaring prices and recession fears, consumer confidence remains low. Most people are focusing their spending on the essentials like food and heating, with little left over for anything else.
“On top of this, at the end of September the limit for pursuing sequestration was lowered to £5,000 which could see an increase in creditors pursuing debts using the bankruptcy process.
“The new Scottish rent freeze brought in last month will go some way towards supporting people’s finances – rent prices in the country have risen almost 10% over the past year and are likely to see upward pressure as mortgage rates rise and landlords look to pass costs on to renters once the freeze is lifted, so whilst the freeze will provide some assurance for Scottish renters there is likely to be rent-rise shock in the pipeline.
“For many businesses and individuals, some difficult choices lie ahead but with the right support from a qualified professional, there are many potential options available to help tackle financial distress. Having the conversation early, before your money worries get worse, will give you more time to consider the best course of action.”