Scotland business

Big drop in Scottish business failures, KPMG says

There has been a "significant" drop in the number of Scottish business failures for the third consecutive quarter, according to KPMG.

The latest figures from the professional services firm showed the total number of insolvencies in the third quarter of 2013 was 230.

This was a 27% decrease on the same period last year, when 316 were recorded.

It follows falls of 45% in the second quarter and 46% in the first quarter.

The total number of company failures in the year to 30 September 2013 was 837 - a 33% reduction from 2012's total of 1,262 during the same period, and the first time an annualised drop had been recorded since 2008, KPMG said.

The number of liquidations, which usually affect smaller companies, fell by 30% in the third quarter of 2013 when compared with the same period in 2012 - from 285 to 200.

'Benign environment'

Meanwhile, the number of administrations and receiverships, which usually affect larger businesses, remained static at 30 in the quarter, the same as in 2012.

Blair Nimmo, head of restructuring for KPMG in Scotland, said: "These figures show a positive slowing in the number of business failures, which is good news for the Scottish economy. Year-on-year the number of insolvencies, for both larger and smaller businesses, continues to fall.

"As we take the first steps toward recovery, our figures suggest an increasingly more benign environment, with trade creditors, banks and the HMRC now more likely to explore alternative solutions rather than taking insolvency action.

"It may be too soon to say whether this will translate into investment for growth as, although the number of new insolvency cases to come across our desks continues to fall, our debt advisory practice remains busy with companies - both large and small - who are still struggling to access finance.

"Recovery will be a slow process but our experience tells us those businesses which survived the worst of the economic downturn, by restructuring to focus on preserving cash and reducing costs, should now be well placed to take advantage of the gradual return to growth."

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