Addi Shamash, corporate restructuring partner at HBJ Gateley’s Aberdeen office, commented on the latest inbsolvency statistics.
She said: “The good news is that overall personal and corporate insolvencies are decreasing, as the economy recovers and both individuals and companies enjoy a wider range of options for dealing with financial distress.This is also likely enhanced by stricter lending controls, which are leading to more manageable debt levels.
“While it’s good to see a reduction in corporate insolvencies being filed this quarter (8.6%), more telling is how significantly the numbers are down on the same time last year (13.6%). This indicates broader economic recovery, meaning that businesses in distress have better access to restructuring options and are more likely to go on to a positive future. Added to this, the rise in alternative financing is also possibly contributing to this improvement, as businesses now have more options for flexible growth funding.
“Although not necessarily reflected in today’s figures, we need to be aware of the current downturn in the offshore oil and gas industry and how it will likely be reflected in future. The current downturn might lead to some companies, unfortunately, needing to close their doors. However, with increased options for non-insolvency debt relief or restructuring paths, we are unlikely to see a steep rise in insolvencies overall. The oil and gas sector in Scotland has survived downturns in the past and will come through this one as well. Hopefully, the increased options for companies in distress will mean that we will see significantly fewer casualties than we would have if this downturn had coincided with the wider recession.”