The number of companies going bust fell last month despite the UK’s longest double-dip recession since the 1950s, according to a report today.
Insolvencies dropped by 9.5% year-on-year in July, with 1,776 companies failing against 1,962 companies a year earlier, according to the latest Business Insolvency Index from Experian.
Scotland’s insolvency rate is now the lowest in two years after a 25.3% fall on the number of businesses failing since last July.
The study found the biggest improvements across the UK came from the non-food retail sector, which saw the rate of insolvencies fall the furthest – to 0.1% in July from 0.2% last year.
But the car market suffered, with insolvencies increasing by 41.7%.
The biggest firms – employing more than 500 staff – and smallest firms with between 11 and 25 employees were those to register the most significant falls in failures.
Max Firth, managing director of business information services at Experian, said: “Since March this year, when the insolvency rate peaked at 0.11%, it has remained fairly stable – between 0.08% and 0.09%.
“The lack of any real increase is clearly welcome and this picture is unlikely to change in the near future.”
But it is thought the drop in insolvencies is partly down to the rise in the use of rescue deals known as company voluntary arrangements (CVAs), where firms avoid going into administration by asking lenders and creditors – such as landlords – to renegotiate their debts.
A separate study today from accountancy firm Wilkins Kennedy shows the number of CVAs rose 10% in the year to June 30 to 769.
Budget hotel chain Travelodge was the latest firm to launch a CVA, announcing a deal last week to walk away from 49 loss-making hotels and write off £700m (€900m) of its debts.