More Scots firms going bust

Liquidators were appointed at 240 Scottish firms

The number of Scottish firms going into liquidation has soared by more than 40% in the first three months of this year, according to new figures.

Business advisors Grant Thornton have also warned that the number of Scottish companies going into liquidation has hit a 10-year high.

The company's report said that liquidators were appointed for a total of 240 firms in Scotland during the first quarter of 2002.

Hotels and catering businesses were hardest hit

Liquidators were appointed by the directors of 70 firms, while in the other 170 cases the plug was pulled by creditors.

This means that more investors and banks are under pressure to recover debts.

The hotel and catering trade was the worst affected industry, with the figures suggesting a year-on-year increase of 200%.

Business services were also badly hit.

BBC Scotland business correspondent Hayley Millar said there was always a lag between an economic downturn and the time when individual companies were affected.

Cause for concern

That meant that many liquated firms had been suffering throughout 2001 from a slowdown in the economy and the after-effects of the 11 September terror attacks in the United States.

These problems may have bottomed out - but insolvency experts at Grant Thornton believe there is still cause for concern for the rest of the year.

Last year, the firm warned of "early signs of growing problems within the Scottish economy" when it reported that the rate of company failure was at its highest level for nearly nine years.