THE new head of restructuring at accountancy firm Johnston Carmichael has declared there is no single underlying factor which has driven the spate of failures seen across the Scottish construction sector in recent weeks.
Donald McNaught, who has taken over from Matt Henderson, said there has been debate within the insolvency profession over whether the failure of companies such as Crummock and Lambert Contracts can be linked to a Carillion “ripple effect”.
The debate has followed concerns that sub-contractors which had worked on projects for Carillion would be left out of pocket following the high-profile collapse of the infrastructure giant earlier this year.
But Mr McNaught, who set up Johnston Carmichael’s Glasgow restructuring operation after he joined the firm in 2011, said it is “hard to identify trends”.
He explained: “Businesses fail for all sorts of reasons. We dealt with the Crummock receivership recently which was probably the largest one that hit the press in a very short space of time. That isn’t necessarily down to wider market issues.
“There undoubtedly are underlying market issues, for example in the restaurant trade where you have got restaurateurs dealing with higher rates, higher rents, a decline in footfall or increased competition. That does inevitably have an effect on the restaurant trade in Glasgow. The restaurant trade in Aberdeen [was] inevitably impacted by the oil price in 2014, so there are sector issues, undoubtedly.
“But you tend to find insolvency might be [down to] one of a number of factors. It is potentially due to a failure of a customer or a succession issue or bad management. It is not usually one thing in isolation.”
READ MORE: Construction firms go bust with loss of 300 jobs
The winding up of Airdrie Savings Bank is another high-profile insolvency case Mr McNaught has recently worked on. He said the bank was ultimately the victim of regulatory changes ushered in after the financial crisis.
Mr McNaught noted: “This is just a banking institution that unfortunately was hit by the additional compliance brought in after the banking crisis, as a result of the behaviour of some of the other banks. [It] was simply too small to cope with the regulatory burden, so the decision was made to stop trading.”
Meanwhile, asked whether the prospect of Brexit was making Scottish firms more vulnerable to failure, Mr McNaught said: “We can definitely see it creating uncertainty in terms of people’s investment decisions.”
He added that Brexit could have an acute effect on sectors where Johnston Carmichael has a strong presence. These include agriculture and hospitality, which “rely on workers coming in from other parts of the EU, whether it is fruit picking or working in hotels, pubs and restaurants.”
He added: “I think across the board there will be impact and uncertainty. As it becomes clearer as to how we will exit, hopefully that uncertainty disappears.”
Mr McNaught joined Johnston Carmichael after working on corporate insolvency for Grant Thornton and, before that HLB Kidsons. Initially working under Mr Henderson at Johnston Carmichael, he was instrumental in setting up the insolvency practice in the firm’s Glasgow office. It was the “final bolt on” which allowed the Glasgow office to become a full-service practice.
Having joined as a director, Mr McNaught rose to become partner in 2014, and has overseen the steady growth of the restructuring team during his time with the firm.
The team now includes 25 staff across four locations, half of whom are based in Glasgow. Recent recruits include Martin Barr, who can lean on his 20 years’ experience in money advice and insolvency in his role as head of the personal debt team.
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