The following article by Lee Jones has recently been published in the Coventry Chamber magazine:
Insolvency Practitioners? You must be really busy….
As Lee Jones, from Coventry’s leading insolvency and business recovery specialists, BRI Business Recovery and Insolvency says, “If I had a pound for every time someone has said that to me over the last couple of years, well, I couldn’t quite afford to retire, but you get the picture?”
Lee says, “The public perception is that because we are in a recession (or even two), businesses must be failing and that we, as Insolvency Practitioners are up to our eyes in insolvency and restructuring work. It’s just not the case. In fact the figures suggest that this recession is producing not only fewer insolvencies generally, but fewer than we would normally experience in periods of so-called economic growth.”
The number of corporate insolvencies for the third quarter of 2012 was the lowest since the last quarter of 2010, and 14% down on the second quarter of 2012. The insolvency market is certainly slow and arguably flat-lining.
Much has been made of the high number of ‘zombie companies’ currently £146,000. These are businesses that will never earn enough to pay off their debts to the bank, let alone make a profit and pay a dividend. These businesses are clinging on and one reason is that interest rates are so low. The lenders are reluctant to pull the plug and the directors can’t afford to. The result is that you have companies that are essentially treading water. Companies that in previous recessions would have failed are still with us.
Additionally, some recent statistics compiled by Experian suggest that there is an average of £4.7billion of unpaid debt left behind each year by UK companies that simply choose to close down and apply to the Registrar of Companies to be dissolved and struck off the register. These companies are clearly insolvent but are not going through any formal insolvency proceedings nor are they included in any official figures.
As Lee explains, “There are some circumstances, usually where a company has little or no assets, where this may well be the most appropriate course of action for the company and its directors. But it’s not the answer for everyone. I would certainly advocate taking advice from an Insolvency Practitioner before considering this as it is not without its risks and we would explain in detail the benefits and potential pitfalls.”
Lee continues, “An essential part of any recovery from recession necessitates the removal of the dead wood to make room for new growth. Insolvency and recovery professionals play a vital role in this process.”
People often have a poor opinion of Insolvency Practitioners. We here at BRI do not revel in other people’s misfortune but we provide a necessary service for those businesses in financial difficulty which need to be restructured, often by way of a formal insolvency process, or those businesses which have simply reached the end of the road and need to be wound-up.
Despite the formal appointment numbers being down, at BRI we are still speaking to a lot of people. We are increasingly working behind the scenes, ‘hand-holding’ and monitoring situations, offering advice where appropriate and trying to find more creative and practical solutions for the people who come to us for advice or sometimes just helping them to help themselves.
For further information on any insolvency or business recovery queries, contact Lee Jones at the BRI Coventry office on 02476 226839, or by email email@example.com
Pre-Christmas payout to creditors