Sharp rise in company debt judgments

Malcolm Hurlston

Registry Trust is the non-profit organisation which collects decree and judgment information from jurisdictions across the British Isles and Ireland.

In Scotland, it collects information on small claims, summary, ordinary cause and simple procedure sheriff’s court decrees. A decree is incontrovertible proof that debt has not been managed.

There were 1,573 decrees issued against all businesses in Scotland during Q1 and Q2 2018, 31 per cent more than during the same period of the previous year.

A 64 per cent rise in the number of decrees issued against companies accounted for this increase. In sharp contrast, the number of decrees registered against unincorporated businesses, which are generally smaller, decreased by 19 per cent.

Despite rising in number, the average company decree’s value halved causing the total value of company decrees to fall 17 per cent; the total value of non-corporate decrees surged 51 per cent. Together, these changes caused the total value of all business decrees to drop two per cent.

During Q1 and Q2 2018, 13,190 debt decrees were registered against Scottish consumers, 20 per cent more than in the first half of 2017. This combined with an 11 per cent fall in average value caused the total value of all consumer decrees to increase by seven per cent.

Only 3.42 per cent of decrees were marked as satisfied during the first half of 2018, far lower than the 14.54 per cent of satisfied debt judgments in England and Wales, where satisfaction rates are generally higher owing to legal differences.

Malcolm Hurlston CBE, chairman of Registry Trust, said: “Registry Trust is analysing debt claimants in Scotland by sector to improve understanding of the bare statistics. Currently, the four major categories are debt purchasers, local authorities, primary lenders and housing associations.

“The increased number of decrees against companies is more likely to be associated with more active debt purchasers than with any deterioration in the economy. The increased recording of debt problems is in the public interest, making it more likely that credit ends up in the right hands.”