The Accountant in Bankruptcy has confirmed that in May there were 118 company insolvencies – the joint highest monthly total in the past five years. 

This total was nine higher than the number recorded last month and is 22% higher than the total from May 2023. 

The total consisted of 71 creditor voluntary liquidations (up from 59 in April); 43 compulsory liquidations (down from 48) and four administrations (down from two). 

There were no company voluntary arrangements or receivership appointments.

Compulsory liquidations have traditionally been the most frequent kind of company insolvency in Scotland but since April 2020 and the Covid-era restrictions, they have been overtaken by CVLs. 

This shows how proactive Scottish directors and their accountants have become in making difficult decisions and acting decisively before their creditors decide for them. 

The total insolvency rate in Scotland for the 12 months up to and including May was 53.4 per 10,000 companies on the effective registers. This was up 1.3 from the preceding 12 months.

Chris Horner, insolvency director with BusinessRescueExpert said: “Economic growth has effectively flatlined again after a positive couple of months and Scottish companies are still paying the price of high interest rates, which the Bank of England have confirmed are being held again.

“This decision, the ongoing cost of living crisis and the forthcoming general election and potential new government and policies means that we could see levels rise even higher in the short to medium term.

“New regulations on pre-pack administrations have added complexity to the procedure and increased professional costs while the reintroduction of preferential status from HMRC may have made several directors question whether it is worth restructuring an otherwise viable company in favour of liquidation instead.”

Scottish business owners and directors are adept at understanding which way the economic wind is blowing and that fact that so many are choosing to close their businesses is significant. 

Restructuring and rescuing a business can be rewarding but several are now deciding to draw a line and look to begin a new chapter of their professional lives instead this summer. 

No matter what situation your business is facing, getting some professional impartial advice before acting is always a sound decision. 

We offer a free initial consultation to discuss your company’s position and once our advisors have a clearer understanding of where you are and where you want to be, they will be able to help you plot a feasible path. 

All you have to do is to get in touch with us first.