Construction firms urged to “plan ahead” to avoid insolvency risk

Derek Forsyth

THE head of business recovery and insolvency at Campbell Dallas has expressed concerns over new insolvency statistics for Scotland and warned construction firms to plan ahead for the “traditionally challenging” next quarter.

New stats revealed there were 3067 personal insolvencies in Scotland in the quarter to 30th September, an increase of 23% on 2017.

There were 232 corporate insolvencies, which is on a par with 2017’s figures, however construction, retail and hospitality accounted for more than half of this total. Derek Forsyth, head of business recovery and insolvency at Campbell Dallas said, “This trend is alarming, particularly as we go into a traditionally difficult quarter for the construction and rural hotel sectors, and whilst retail sales will generally be up, the traditional high street stores continue to be affected by high costs and online sales. The impact of the Budget increase in the National Living Wage will affect margin, making trading conditions even more difficult.

“The construction sector in Scotland has seen a number of high profile casualties in the last few months, with a large number of creditors losing out, and employees losing their jobs. There has been much commentary recently about the potential adverse impact of Brexit on EU citizens working in the hotel and leisure sector, and on the retail side, whilst such as House of Fraser will always attract headlines, there are many medium and smaller outlets similarly being affected. The proposed reintroduction of Government preferential claims from 2020 in the Budget will adversely affect the returns to the ordinary creditors.

“It is vital that directors and stakeholders take all steps to plan ahead and ensure that their businesses are robust and financially viable, and do not become part of the next quarter’s statistics.”