Insolvency – down but not out

Insolvency business is down. We all know the number of people going bankrupt in 2003 rocketed to levels not seen since more than a decade ago. But it is the fact that the number of businesses going insolvent fell 25% on the year before that is most striking.

That’s good for most of UK plc, but bad for insolvency practitioners, for whom it is the work carried on struggling businesses that really makes a difference to the bottom line.

That said, we shouldn’t expect insolvency firms themselves to go under.

Nevertheless they should brace themselves for lower fee income from this service line for the foreseeable future. That’s particularly significant as it’s one of the fastest growing – rocketing by 16% across the Accountancy Age Top 50 last year.

If there’s any consolation, it’s that the biggest players should be OK.

With special agreements with lenders in place, they will continue to eke out a reasonable living by providing business restructuring advice to a bank’s (potential) problem clients.

But smaller firms with significant insolvency operations should think long and hard about redirecting resources. Hopefully most will have done so already.

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