Scottish bankruptcy cases decline

More people appear to be opting for a scheme to pay off their debts over a longer period

The number of people declared insolvent has fallen, according to official figures.

Figures from the Accountant in Bankruptcy for the three months to the end of September show a 14.7% drop in personal insolvencies compared with the previous quarter.

The number of company failures increased by more than 45% during the same period.

However compared with a year ago business failures fell by 2.2%.

A total of 3,411 individuals were declared insolvent between July and September this year - down from 4,000 in the previous three months.

In contrast the Scottish government said its Debt Arrangement Scheme (DAS) which allows people to pay back what they owe over a longer period "continues to be seen as a viable alternative to bankruptcy".

The number of approvals to the scheme was 1,170 during the quarter which the government said represented a four-fold increase since the equivalent quarter in 2009-10.

The minister for Energy, Enterprise and Tourism, Fergus Ewing, who has responsibility for personal insolvency and debt management in Scotland, said: "I welcome the reduction in Scottish personal insolvencies this quarter despite the current financial climate."

He added: "The Scottish Government will continue to take action to provide the best possible debt solution services to help those people struggling with debt."

Company failures

Between July and September, there were 268 company failures compared with 184 the quarter before and 274 for the same three month period a year ago.

Bryan Jackson, business restructuring partner with BDO, commented on the increase.

He said: "Many companies have simply been existing for some time, barely maintaining solvency in the hope and expectation that an upturn in the market will be around the corner.

"These firms, sometimes called 'zombie' businesses, will have been in the doldrums for several years and a slight change in circumstance, such as the loss of a key customer, could push them over the edge.

He concluded: "In Scotland, I think we are likely to see more corporate failures in the months, and even years, ahead as the economy improves slowly and markets adjust to a different operating system.

"It is clear that we will not be returning to the boom years of 2007 and the best business owners will know this and will adjust their activities accordingly."