FEWER Scottish companies entered liquidation in the first quarter than in the same period last year, bucking the trend set in the rest of the UK.
Figures published yesterday revealed that 186 Scottish companies became insolvent in the three months to the end of June, up from 170 in the first quarter – but down by 6.5 per cent compared to the same period last year.
The insolvencies included
111 compulsory liquidations – up by 16.8 per cent on the first quarter but a drop of 15.3 per cent on the second quarter of 2007 – and 21 voluntary liquidations.
A total of 17 companies also entered receivership in the second quarter, fewer than in the previous three months and down on last year's figure.
In England and Wales, the number of compulsory liquidations rose 15 per cent when compared to the same period last year and were up by 11.6 per cent on the first quarter.
Matt Henderson, a business recovery and insolvency partner at accountancy firm Johnston Carmichael, said: "Around 12-18 months ago, the banks started to take a tougher approach to extending existing facilities for companies or lending to new ones. This is now working its way through the system".
Henderson highlighted the rise in the number of Scottish companies entering administration, where they call in accountants to help them restructure their business.
In the second quarter, 35 Scottish companies called in the administrators, up from 12 in the first quarter and 11 in the second quarter last year.
Henderson said: "Twelve months ago, there were more options for banks to lend money to companies. For many businesses, if the banks won't lend you money then there's no option but to go to the wall."
Blair Nimmo, head of restructuring at KPMG in Scotland, said there was a real feeling that the business climate is getting worse.
"There can be little doubt that the credit crunch is now really beginning to bite," Nimmo added.
Statistics from the UK government's Insolvency Service revealed that 938 companies in England and Wales were in administration in the first quarter, up from 585 in the same period last year.
Smart Money, Page 46
The full article contains 375 words and appears in The Scotsman newspaper.
