Yahoo Finance Surge in struggling companies is good for business, says insolvency specialist
Insolvency specialist Begbies Traynor is hiring more staff as thousands more companies fall into trouble.
The London-listed business said it had grown its headcount by 12pc over the past 12 months in response to “continuing increase in demand” for insolvency services.
Begbies has hired 50 more staff to work on insolvencies, taking the total headcount in the division to 620. The company now has more than 1,000 staff.
Ric Traynor, executive chairman of the group, said there has been “an increase in insolvency numbers, reflecting the current interest rate and inflation environment”.
Notable collapses Begbies has worked on since the start of the year include Paperchase, Worcester Warriors rugby club and Covid testing contractor Circular 1 Health.
Paperchase was bought out of administration by Tesco, a consortium led by Worsceter’s former chief executive are trying to finalise a deal for the rugby club and Circular 1 Health remains in administration.
Begbies tries to find a buyer for these businesses in order to rescue staff. If none can be found, insolvent businesses are liquidated.
The group said: “Our insolvency teams have experienced increased demand in the period, reflecting activity levels across the market as corporate distress levels continue to increase.
“We anticipate that activity levels in our largest service line of insolvency will continue to increase in tandem with the indicators of corporate financial stress in the UK, resulting from the current interest rate and inflation environment.”
Almost 4,000 more companies fell into difficulty in the 12 months to the end of September, compared to the same period last year. 24,326 businesses entered insolvency during the period, according to official figures.
The numbers continue to rise: Insolvency Service data shows 2,315 companies entered insolvency in October, a jump of 18pc on the same month of 2022.
Insolvencies averaged around 1,500 businesses per month before the pandemic. During Covid, insolvencies dropped to below 1,000 a month as support payments and tax breaks, combined with a moratorium on winding up petitions, prevented companies from collapsing.
However, rising interest rates are now pushing more businesses under, coming just after the energy price crunch and the end of Covid support schemes.
Begbies’ revenues hit £65.9m for the six months to the end of October, up almost 13pc from £58.5m in the same period of last year.
However, pre-tax profits fell from £5m to £3m as a result of £3.9m in fees related to takeovers. Deals included acquiring Jones Giles and Clay in September, an insolvency team based in Cardiff.
Begbies shares rose 2.9pc on the results.
