Scottish insolvencies fall for second consecutive month
While most of us are glad to see the back of Dry January and darkness at 4pm, there is a very good reason to look back to the first month of 2025 this week – the publication of the latest corporate insolvency figures for Scotland by the Accountant in Bankruptcy (AiB) and The Insolvency Service.
In Scotland last month there were 75 company insolvencies, a decrease of 15% on the total from a year ago.
January’s total was made up of 32 compulsory liquidations (up from 27); 37 CVLs (down from 52) and six administrations (up from three). There were no CVAs or receivership appointments recorded.
Scotland’s insolvency regime is partly devolved. The Accountant in Bankruptcy (AiB), Scotland’s insolvency service, administers the Register of Insolvencies which is a publicly accessible statutory register regarding the insolvency of individuals and businesses in Scotland including company liquidations and receiverships.
Between June 26th 2020 and January 31st 2025, there were three restructuring plans and one moratorium in Scotland. Both of these procedures were created by the Corporate Insolvency and Governance Act 2020.
Traditionally Scotland has seen more compulsory liquidations than any other kind of insolvency process but CVLs overtook them in April 2020 and have remained higher ever since.
This shows that more Scottish directors and their accountants are taking difficult decisions early but this enables them to retain control of key elements of the process rather than relying on creditors taking action and forcing the closure of their businesses.
The 12 month rolling insolvency rate for the effective register shows a rate of 51.3 companies per 10,000 entering insolvency in Scotland between February 1st 2024 and January 31st 2025.
This was a decrease of 1.3 from the preceding 12 months ending in January 2024.
Scotland was an outlier last month in seeing a monthly reduction in insolvencies as England, Wales and Northern Ireland all saw increases – the first monthly increases in January for four years.
The total number of company insolvencies for the whole of the UK in January was 2,074 – a monthly increase of 131.
Chris Horner, insolvency director with BusinessRescueExpert, said: “While Scotland has started the year with a fall in insolvency levels, further drops are by no means guaranteed.
“Business costs are rising steadily while overall demand and consumer confidence is weak.
“Firms are not only struggling with weaker sales but are extremely limited in their ability to offset pressures by increasing their prices. Add to this that many Scottish firms are still struggling with high levels of debt and expensive costs of servicing them and it’s a troubling picture.
“While it’s pleasing to see interest rates being cut this month with more to come in the future in all probability, these alone aren’t enough to offset the headwinds companies are facing.”
2025 promises to be another challenging year for companies in Scotland and beyond.
Directors and business owners can get in touch with us right now to arrange a free initial consultation to discuss what options they have available depending on the unique circumstances their company faces and that they can begin to implement straight away.
No matter what your aims and objectives are for 2025, the sooner you get some impartial, practical advice and ideas, the sooner you can act on them to protect and strengthen your business.