Ernst & Young is sacking more than a quarter of its insolvency partners following a shock decision to merge its corporate recovery and corporate finance divisions.
The eight partners were left in the dark until last week. They have now been put on notice to leave by 30 September. One internal source described the U-turn as a dramatic and abrupt change.
He said it was a reaction to the increasingly global nature of insolvency work which gives E&Y ‘only a narrow field of opportunity’, particularly when firms such as Arthur Andersen and PricewaterhouseCoopers are increasingly competing for overseas cases.
‘The corporate finance department has effectively mounted an internal takeover of the insolvency business. It was a big surprise but I think other Big Five firms are moving in that direction,’ he said.
Only three months ago, when news emerged that PwC was preparing to sack 80 members of its non-bank insolvency team, E&Y insolvency practice head Alan Bloom, told Accountancy Age the firm had already taken account of shifts in the market and had no plans to refocus.
‘We saw this a couple of years ago and believe we have already addressed this issue. PwC is certainly behind us,’ he said at the time.
But the firm decided to merge the departments following the uplift in less formal recovery work or ‘turnaround’ that required corporate finance input. Bloom was away on holiday at the time of the announcement.
The partners who will be leaving are: Graham Ritchie (Edinburgh), Jon Newell (Leeds), Don Bailey (Manchester), Kim Rayment (Birmingham), Cedric Clapp (Bristol), Terry Carter and Jason Elles (both London). John Readman (Glasgow) will be leaving at the end of the year.
E&Y said it was maintaining its commitment with a new emphasis on voluntary liquidations, the financial services sector and internal restructuring.
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