Filippa Connor and Ruth Duncan tell Accountancy Age about building a specialist insolvency practice in the crucible of the worst market conditions since the before the financial crisis
LAUNCHING a specialist restructuring practice at a time when insolvency work had plunged headlong off a cliff could appear unwise. But two years on from its launch, RNF Business Advisory is expected to deliver around 30% of revenue growth this year with £1m of fees in its first full year of trading.
Filippa Connor and Ruth Duncan set up specialist insolvency practice RNF in December 2013. At the time, corporate insolvencies for the calendar had fallen 9% to 18,856 from 20,749, while liquidations, administrations and creditor voluntary arrangements were also thin on the ground.
Conditions have hardly improved since then. Data compiled by Accountancy Age earlier this year revealed that 15 of the 31 Top 50+50 firms to publish insolvency fees reported a decline, while statistics from the Insolvency Service revealed that corporate and personal insolvencies in England and Wales in the first three months of the year fell to their lowest levels since before the financial crisis.
According to Connor, one half of the UK’s only all-female insolvency practice, launching RNF during one of the toughest markets for IPs was an idea that “sounded pretty good after the second bottle of wine”.
Connor’s response is in keeping with her jocular manner but she, and co-founder Duncan, clearly knew what they were taking on. They are both old hands in the profession. Duncan entered the profession in the mid-1980s at the London office of Levy Gee after a period at the Insolvency Service, while Connor qualified as an insolvency practitioner in 2000 and set up her own firm, B&C Associates, in 2002.
Their bet appears now to be paying off. In 2016, they hope to increase turnover by 20% plus there is an improved outlook for the market more generally. The army of ‘zombie’ companies – which are essentially dead but continue to survive thanks to low interest rates and bank forbearance – appear to dying off. According to trade body R3, the number of businesses just paying the interest on their debts – a key characteristic of ‘zombie businesses’ – has fallen to 69,000 from 154,000 in August 2014.
From the point Connor has managed to “badger” long-time friend and associate Duncan into launching RNF with her, it was not long before the genesis of the idea had become a reality.
“It was clearly an idea that was right and whose time had come because from having the idea and being up and running was only a couple of months,” says Connor.
Helpfully, both had previous experience setting up their own practices. After a career taking in stints at the London offices of Grant Thornton and Smith & Williamson, Duncan worked at Baker Tilly’s Bromley office before leaving to set up her own firm Maxwell Davies in February 2003. This practice was taken into Atherton Bailey in June 2006.
Connor set up her own firm in 2002 and since leaving B&C Associates in 2009 has started and developed the London offices of both The P&A Partnership and Reeves.
“Last time I set up an insolvency practice it took six to nine months, but that was in 2002. Nothing was done by email and I did notice the difference setting up with Ruth. There was a lot more regulatory, compliance and procedural hoops to jump through compared to 2002 but they all happened quicker,” Connor says.
‘Bugbears’ included transferring over all the accounts, telephones and everything else, Duncan says. Although they used accountants to set VAT and payroll up and had some HR help transferring staff, of which there are four full-time members.
RNF operates as two firms – RNF Business Advisory and RNF Debt Advisory – under a joint structure that allows them to take advantage of a VAT exemption. The firm operates out of two offices from Maidenstone in Kent – the HQ – and London.
The Maidenstone office was a hangover from Duncan’s time at Atherton Bailey, with London a more recent addition. “It’s quite nice having a London City address. This feels like a good place to be,” says Connor.
A benefit of being such a small practice – Connor and Duncan are the only licenced IPs – is the small cost base. “We can be very competitive on price, we can also be very quick. We haven’t got a lumbering beast to get up to speed if we need to be there in two hours, we are there in two hours,” explains Connor. “The disadvantages of course are while we are more flexible it reflects exactly on the two of us.”
Duncan adds that the figures are easier as a consequence of their size. “We know what our break even situation is and what our break even points are exactly. We know how low we can go, but no further,” she says.
Size doesn’t preclude the firm from taking on the whole gamut of insolvency work – which involves 45% corporate insolvency, 30% personal insolvency, 15% solvent liquidation and 10% from consulting work.
“I used to do the small shut down liquidations and administration, but there’s less and less of that around. There’s more restructuring and rescuing going forward and solvent liquidation is definitely a big thing since the change in tax concessions two and a half years ago,” says Duncan.
With 40 years’ market experience between them, understandably a high degree of business comes from referrals, while networking – including social media – plays a key part.
“I do a bit on social media,” says Duncan, adding that “you would be surprised” about the impact.
“Everything leads back to the website. I have been tweeting and doing LinkedIn stuff for about five years. “You will be surprised who picks us up, we have some very odd followers on Twitter – actors and film directors, and for the same reason every IP I have worked for had a rock star on their books.”