Accountancy firm gears up for more business rescues

Jul 23 2008 by Barry Turnbull, Liverpool Daily Post

ACCOUNTANT PriceWaterhouse-Cooper plans to double the size of its North West business recovery team as corporate insolvencies soar.

Business failures rose by 46.7% in the first quarter of the year, compared to 2007.

Recent examples of businesses struggling to cope with slowing conditions include shoe chain Dolcis, Knowsley-based retailer Ethel Austin, and Floors to Go, which went into administration on Monday.

The Liverpool and Manchester division's new boss, Matt Wilde, 42, who has taken over after Michael Horrocks's retirement, says he expects staff numbers to double from 30 over the next couple of years as more companies go under or require help to keep trading.

Mr Wilde, a restructuring partner at PwC, said: "We are seeing an increasing wave of distressed transactions as the credit squeeze, raw material price hikes and reduced consumer and corporate discretionary spending hit the weaker players in a number of sectors including retail, leisure and construction related.

"We expect this trend to increase over the coming 12 months, impacting not just those that have been weak for some time but extending into historically more robust companies. Interestingly, there is a new wave of buyers, the specialist distressed investment funds such as Agilo, Endless, MPC, Rutland and others, and these players are creating a new dynamic and modus operandi in the distressed merger and acquisition sector, which we expect to continue to develop over the next 12 months."

Corporate insolvencies in the North West in quarter one of 2008 rose by 46.5% compared to the last quarter of 2007, and 27.8% compared to the same period of last year. In total, 551 businesses in the North West entered into insolvency in January, February and March compared with 376 businesses in the previous quarter. The increase in insolvencies in the North West is the highest rise of any region.

Nationally, the number of corporate insolvencies in quarter one of 2008 rose by 21%, compared to the last quarter of 2007, and 17% compared to the same period last year. In total, 3,359 businesses across England and Wales entered into insolvency in January, February and March, the highest number of insolvencies since the fall-out from the dot.com crash in 2003.

Mr Wilde added: "Clearly, the increase in the number of insolvencies this quarter is a result of the current economic climate, but our experience shows that most company failure and insolvency is down to inadequate planning to deal with these more challenging conditions."

barryturnbull