Fears of high-profile insolvencies could prove to be unfounded
The loss of almost 300 jobs at subsidiaries of northern construction business Dew Pitchmastic again raises concerns that a swathe of businesses are on the brink of collapse
With Ernst & Young’s quarterly profit warnings survey showing a high
number of corporate problems, and government statistics indicating a growing
figure of liquidations and administrative proceedings, the profession is waiting
on tenterhooks for the next big insolvency case.
Is there another MG Rover around the corner or a rush of high profile
businesses going under?
Although the economy could best be described as tepid, banks are still
providing credit for businesses, perhaps in a greater proportion than to
debt-laden individuals.
Simon Allport, a corporate restructuring partner in Ernst & Young’s
Manchester office, expects manufacturing business, generally based in the north
of England, to struggle on in the future amid high energy costs and big pension
deficits.
Despite this, he does not expect a string of high-profile business failures,
due to the more sophisticated approach by industry and accounting professionals
in advising struggling companies earlier on in the debt cycle.
Tony Supperstone, head of insolvency trade body R3, agrees: ‘During the 1990s
everyone realised it was no good companies just failing, banks losing customers,
auditors losing clients.’
As far as sectors go, he agrees that manufacturing is potentially the biggest
area of concern, with rising individual insolvencies representing a growing area
of work for practitioners in the future.
But with traditional businesses like Hunter Rubber and Dewhurst entering debt
proceedings, and individual insolvencies expected to go through the roof, the
profession is still set for a busy future, despite it being unlikely that the
high street will go to the wall.