06.05.2008 CREDIT CRUNCH 'WILL PUSH UP BUSINESS COLLAPSES BY FIFTH'

The number of Scottish company collapses will soar by 20% in 2008 as the effects of the
global credit crunch feed through to the country's businesses.

David Hunter, the head of business recovery and insolvency at the Scottish chartered accountancy practice Campbell Dallas, warned that the credit crunch has already changed the way banks do business, and that in turn will translate into an increase in corporate insolvencies.  Mr Hunter told The Herald:  "Businesses are already finding it more difficult to operate in the current economic environment.

"At the same time, banks are not as generous as they used to be and because of the way they've tightened up their own practices, they're accelerating the end for businesses that are already struggling".  A 20% increase in the number of companies falling into liquidation would take the 2008
Scottish total to almost 650, compared with 539 in 2007, assuming Mr Hunter's dire prediction comes true".

"The banks have become very cautious about debt and they are increasing their security.  If property is involved in a business, a bank will probably take the mortgage as standard security.  They'll also become involved in debt collection,vehicle leasing and stock.  They are quickly and inevitable tightening their belt,and the result is that more companies will be forced out of business".

Publication: The Herald
Date: 6th May 2008