New insolvency statistics underline challenges facing businesses

New figures show a significant increase in both personal and corporate insolvencies across Scotland, reflecting the ongoing financial pressure facing households and businesses.

Personal insolvencies have risen sharply, with more individuals seeking formal solutions such as bankruptcy, protected trust deeds and moratoriums to manage growing debt. Changes to the fee structure have also made bankruptcy more accessible, particularly through the Minimal Asset Process.

Corporate insolvencies have also increased, with a notable rise in creditors’ voluntary and compulsory liquidations, suggesting financial distress is becoming more acute for many businesses. Creditors are taking a more proactive approach to debt recovery, creating knock‑on effects across supply chains, while the overall trend points to challenging trading conditions.

The figures underline that financial pressures linked to higher borrowing costs, pandemic-era repayments and wider cost increases have not eased. Early engagement and seeking advice at the first signs of difficulty remains crucial for individuals and business owners alike to help manage debt and avoid more serious outcomes.

David Alexander, head of debt recovery at full-service law firm Gilson Gray, said: 

“The latest figures point to a clear increase in both personal and corporate insolvencies across Scotland, with rises of around 20% and 28% respectively compared with the same period last year. That reflects the continued pressure we are seeing on the ground, as higher borrowing costs, ongoing repayments from pandemic-era support, and wider cost pressures continue to weigh on both households and businesses.

“On the personal side, the increase in bankruptcies and protected trust deeds, alongside a notable rise in moratorium applications, suggests more individuals are reaching the point where they need formal breathing space or structured solutions to manage their debts. The revised fee structure is also likely playing a role in making bankruptcy more accessible, particularly through the Minimal Asset Process, which continues to account for the majority of cases.

“For businesses, the rise in corporate insolvencies – particularly in creditors’ voluntary and compulsory liquidations – indicates that financial distress is becoming more acute. We are seeing creditors take a more active approach to recovery, and that has a knock-on effect across supply chains. While members’ voluntary liquidations have also increased, which can reflect solvent closures, the broader picture still points to challenging trading conditions.

“Overall, these figures underline that financial pressures have not eased. If anything, they are becoming more entrenched. Whether for individuals or directors, early engagement and taking advice at the first signs of difficulty remains crucial to managing debt and avoiding more serious outcomes further down the line.”