A LEADING Scottish expert in business insolvency has suggested that Scottish business failures are set to soar by a third in the second half of 2008.

Gordon Hollerin, head of corporate recovery and insolvency with leading legal firm Semple Fraser, said "industry insiders" were predicting that the number of Scottish firms going bust could rise by 33% in the second half of 2008 and into 2009.

He said: "As the effects of the credit crunch and the resulting downturn in consumer confidence begin to bite on Scottish businesses, many insolvency practitioners are anticipating a surge in business failures."

The lawyer believes the business sectors most likely to be affected include the property industry - including commercial property development and construction, house-building and home improvements - non-food retail, travel and leisure.

Hollerin, a partner in Semple Fraser, is widely regarded as one of Scotland's top experts in the area of business insolvency. He was recruited in April this year to head the firm's specialist team.

He warned: "Company directors have to be aware of the personal risks which arise in these circumstances. Rather than bury their heads in the sand they have to take appropriate steps to manage those risks, to avoid both personal liability for the company's debts and the possibility of disqualification as directors for up to 15 years."

Hollerin's predictions have been challenged by the Federation of Small Businesses' Scottish policy convener Andy Willox, who warned against "talking ourselves into a slump".

Willox cast doubt on the percentage figure, saying "I am not entirely sure how these figures have been arrived at.

He said his members were expecting a tough year but were "determined to ride it out".

He added: "People running small businesses are resilient and many have built their businesses up over decades. They've been through tough times before and know what gives them the best chance of making it through.

"We can use our size to our advantage - being smaller means we're more agile and able to adapt swiftly to changing market conditions. It is also important that businesses respect these challenging times and ensure that payment passes as normal from business to business to avoid cash-flow problems."