Scottish company failures drop but Brexit dangers flagged

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THE number of corporate insolvencies in Scotland in the April to June quarter was down by 2.4 per cent on the same period of last year, latest official figures show.

The figures, published by the Accountant in Bankruptcy, show there were 239 corporate insolvencies north of the Border in the April to June quarter.

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This was down from 245 in the same period of last year, and 15% lower than the 280 in the opening three months of 2019. The Accountant in Bankruptcy’s insolvency figures do not include administrations.

Edinburgh-based Eileen Blackburn, who chairs insolvency and restructuring trade body R3’s Scottish technical committee, said: “The fall in corporate insolvency numbers compared with the previous quarter is out of line with the general upward trend since the beginning of 2017, but a quarterly fall is not enough by itself to reverse the longer-term pattern.

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“In general, it’s fair to say that economic sentiment in Scotland is mixed. “

She highlighted the impact of protracted Brexit uncertainty on Scottish companies.

Ms Blackburn said: “Businesses which were bracing themselves for Brexit at the end of March may have been caught out by the decision to postpone the UK’s exit from the EU until the end of October.

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“Many companies stocked up in the first quarter of 2019 on raw materials and components, in preparation for potential disruption to normal delivery flows via EU countries in the case of a no-deal Brexit, and may have found after March 29 that they were left with a pile of stock in warehouses, with no immediate buyers.”

She added: “The prospect of doing it all over again later this year, putting added pressure on cash-flow, is not something that will appeal to many businesses, which – understandably – would prefer some predictability and stability as they plan for the rest of the year and beyond.”

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