Scotland's Insolvency Picture 2025: Fewer Personal Bankruptcies But Businesses Under Pressure

23rd October 2025

Scotland's latest insolvency data paint a mixed picture of personal resilience and business strain. The Accountant in Bankruptcy (AiB) and related reports show that while personal insolvencies are falling. The corporate sector is heading in the opposite direction with worrying signs in construction, retail, and hospitality.

Personal Insolvencies Slide - But the Story Isn't All Positive

During 2024-25, Scotland recorded 7,403 personal insolvencies — down 8.4% on the previous year. That figure includes 2,483 bankruptcies (almost unchanged, -0.5%) and 4,920 Protected Trust Deeds (PTDs) (down nearly 12%).

At first glance, that's good news. Fewer people appear to be hitting the financial wall. However, experts suggest that this may reflect shifts in behaviour rather than broad financial recovery. Some Scots may be avoiding formal insolvency routes due to higher costs, stigma, or greater use of informal debt solutions.

One sign of that shift is the steady rise in the Debt Arrangement Scheme (DAS). In 2024-25, 5,292 Debt Payment Programmes (DPPs) were approved — a modest increase of 0.3%, but enough to make DAS the most commonly used formal personal debt solution in Scotland.

Interestingly, creditors fared slightly better: the average dividend paid in bankruptcies rose from 8.1p to 11.1p in the pound, suggesting stronger asset recoveries. For PTDs, though, the average return fell from 17.3p to 16.3p.

Corporate Insolvencies Are Rising — and Fast

The business landscape looks much rougher. Corporate insolvencies rose to 1,175 in 2024-25, seven more than the previous year, and early 2025 data show the pace is accelerating.

In Q1 2025-26, corporate insolvencies jumped 17.3% year-on-year.

In Q2 2024-25, they were up 10.6% compared to the same quarter in 2023-24.

That trend mirrors wider UK patterns, where insolvencies have been climbing steadily since pandemic-era protections ended. For Scotland, it signals that many firms are still struggling to recover amid cost pressures, high borrowing rates, and weaker consumer demand.

The Hardest-Hit Sectors

Not all industries are suffering equally. Insolvency and distress data point to a few clear losers:

🏗️ Construction

Construction is Scotland's most at-risk sector, with a disproportionate share of business failures. Firms are grappling with high materials and labour costs, contract delays, and squeezed margins. Insolvency experts note that construction companies face one of the highest failure rates per business across the economy.

Retail & Hospitality

Retailers and hospitality businesses remain under severe strain. Even as footfall improves, inflation and payroll costs continue to bite. Restaurants, pubs, and small retailers are particularly exposed — many still carrying legacy debts from the pandemic.

Professional, Scientific & Technical Services

This sector, often overlooked, has seen the fastest relative rise in insolvencies in recent years, growing from 79 to 120 cases since 2019. Consultancy, design, and technical service firms have been hit by project slowdowns and client cutbacks as businesses rein in discretionary spending.

Why It Matters

Rising corporate insolvencies highlight a fragile business environment — even as headline inflation eases. For many Scottish SMEs, cashflow pressures remain intense, and there's evidence of "critical" financial distress growing across the board. One recent study showed a 56% increase in firms facing critical distress by the end of 2024.

On the personal side, falling insolvency numbers may look encouraging, but with cost-of-living challenges persisting, the underlying household financial resilience remains uncertain.

What to Watch in 2025-26

Corporate insolvencies are likely to keep climbing, especially in construction and hospitality.

Personal insolvency levels may stabilise, but the mix could shift further toward debt repayment programmes.

Policymakers and lenders will need to balance tighter credit conditions with the need to support viable firms through short-term liquidity crunches.

Bottom Line

Scotland’s insolvency landscape is showing two very different stories:

Households are keeping their heads above water — for now.

Businesses, particularly in construction, retail, and hospitality, are facing a gathering storm.

As one insolvency expert put it recently, "The numbers may look modest, but the direction of travel tells us all we need to know: pressure is building beneath the surface."

A few examples of job losses
Some of the more significant company failures in Scotland in recent years and their job-loss impacts:

Axis Studios (Glasgow) - An animation and VFX studio that entered administration in mid-2024, resulting in 162 jobs lost.
The Times

Stewart Milne Group (Aberdeen-based housebuilder) - Collapsed in early 2024; "over 200 jobs" across Scotland were lost.

Greenfold Systems Ltd (Dunfermline, manufacturing for buses) - Entered administration July 2025; 81 jobs lost of ~90 staff.

Adarma (Edinburgh-headquartered cyber security firm) - Collapsed July 2025; 173 jobs lost.

These illustrate that the biggest recent failures have tended to be mid-sized firms (hundreds of jobs) rather than massive multi-thousand-job collapses in Scotland.