The number of companies filing for administration across Scotland spiked in the third quarter of 2022, as economic headwinds continued to buffet businesses.
Interpath Advisory analysis of notices in The Gazette showed that 14 companies based in Scotland fell into administration from July to September – up from only three during April to June.
This mirrors the wider UK picture, where 265 companies fall into administration from July to September – up from 176 during the same period in 2021, and up from 243 in the third quarter of 2020.
However, administrations are yet to hit the pre-pandemic levels of 401 in the third quarter of 2019.
August, traditionally the quietest month for insolvency appointments, saw the highest monthly number of administrations across the UK since March 2020, with 105 appointments.
The rising number of insolvencies can be seen across a wide range of sectors, with building and construction, industrial manufacturing, leisure and hospitality, retail, and the food and drink industry all witnessing increased activity.
Blair Nimmo, chief executive of Interpath Advisory, said: “The summer months often herald a quieter period for corporate insolvencies, and so the fact that August witnessed the highest monthly total in more than two years is particularly telling.
“We know that companies across Scotland have been wrestling with a myriad of issues for some time - from rampant inflation, to supply chain challenges, to labour shortages - so this is perhaps the first real evidence that a significant shift in restructuring activity is now underway.”
He added: “And let’s remember: the bulk of administrations seen in the past quarter landed well before the economic and political storm that we’ve witnessed in the past few weeks.
“The impact of rising interest rates, currency and gilt yield movements, and the increase in energy prices from 1 October are yet to feed through, but undoubtedly will only serve to compound the extraordinary pressure that businesses were already under.”
Alistair McAlinden, head of Interpath Advisory in Scotland, continued: “We are certainly seeing a rise in activity across Scotland, as evidenced most recently with administrations in the oilfield services and construction sectors and, most notably, 10 subsidiaries within the Arjowiggins paper mill group.
“Based on our current pipeline, we would suggest that by the end of the fourth quarter this year, insolvency levels will have risen even further.”
Don't miss the latest headlines with our twice-daily newsletter - sign up here for free.
