THE number of companies
in Scotland declared insolvent has risen by 46% in a year, according to
new analysis.
Professional services firm KPMG said economic volatility is behind the trend, with Brexit creating uncertainty for businesses.
KPMG advised Scottish businesses to plan for worst-case scenarios and be fiscally cautious.
The firm said there were
698 corporate insolvency appointments between January and June,
up from 479 in the previous
six months.
Of the 698 cases, the vast majority (661) involved a company liquidation, while 37 were administration and receivership appointments.
The number of insolvencies in the quarter ending June 30 is similar to that of the same period the previous year. Blair Nimmo, KPMG head of restructuring, said: “While there is clearly a trend towards an increase in corporate insolvencies, there are some signs of resilience.
“The last quarter has remained far more static and a number of industries are taking proactive measures to put themselves on a more stable financial footing, including retailers, hoping corporate voluntary arrangement proposals could head off the prospect of administration. The ongoing Brexit discussions and change of Prime Minister
and Cabinet have undoubtedly
created a climate of uncertainty but there are wider challenges at play, creating a toxic mix of issues for businesses going through a period
of distress.”
He added: “The best approach for any business in Scotland right now is to maintain a fiscally cautious
approach, ensuring you maximise reserves, proactively and regularly review contingency plans and –
ultimately – plan for any worst case scenarios.
“A number of challenges could be on the horizon, but with a resilient, focused approach, including taking appropriate advice at an early stage, Scotland’s business community
can continue to grow sustainably in the long-term.”
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