The number of corporate insolvency cases in liquidation and receiverships in Scotland for the last quarter of 2021 was 164% higher compared to the same period the pervious year.
Research undertaken by insolvency and restructuring trade body R3 in Scotland found that there were 240 cases during the last three months of the year, up from 91 year-on-year.
The overall number of personal insolvencies, bankruptcies and protected trust deeds in Scotland during the fourth quarter was 13% higher than the pervious comparable period, although personal insolvencies in Scotland fell by 8.3% quarter-on-quarter.
Richard Bathgate, chair of R3 in Scotland and restructuring partner at Johnston Carmichael, explained that there has been a sharp rise in corporate insolvencies, with 854 corporate insolvencies in the financial year 2021-22 compared to 442 during 2020-21.
This has been driven by a 160% increase in the number of creditors’ voluntary liquidations (CVLs).
Bathgate explained: “This suggests directors are preferring to use the CVL procedure over the compulsory liquidation procedure, perhaps because of lower costs to enter the process.
“In the latest quarter, this trend of a sharp rise in the number of CVLs is even more pronounced, with an increase of 257% in the number of CVLs compared to quarter four of 2020-21.”
The report found that members’ voluntary liquidations (MVLs), which are solvent liquidations often used to make tax efficient returns of capital to shareholders, declined by 18% in the financial year 2021-22, compared to 2020-21.
The number of MVLs fell from 879 to 717. The trend was even more pronounced in the fourth quarter, which saw a 40% decrease in the number of MVLs year-on-year.
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