Receiverships on rise again
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Financial Correspondent
Receivers are being sent into more bust companies than at any time in the past 18 months, and some insolvency firms are even taking on staff as the economic recovery stutters.
The anecdotal evidence from insolvency practices will be given a boost today by the lastest Touche Ross receivership figures for the UK, which are expected to show another significant increase for the second month running, after a long fall.
Some receivers, like Neil Cooper of Robson Rhodes, fear the UK may be entering another recession. Colin Bird of Price Waterhouse, who is also head of the Society of Practitioners of Insolvency (SPI), suspects the figures have reached a plateau that is higher than previous recoveries.
"With low inflation and low growth it's very hard to make money," Mr Bird said. He has noticed an upsurge in receiverhip work recently. "One of our people said he had had more new work in the last three weeks than in the last six months."
The trend towards receivership specialists laying off staff as the recovery gathers pace and fewer companies collapse has also gone into reverse, he says. "We've stopped downsizing our staff numbers, and we are still 20 per cent over budget. Work hasn't dropped as much as we thought and the trend is upwards."
David Buchler of Buchler Phillips, the insolvency and corporate finance boutique, says: "We're extremely busy. This year has been bitty but in the last three months we've been extremely busy. Receivers feel the figures are plateauing out for the next few years or so." He added that the retail sector is being badly hit at the moment.
The economist Patrick Minford foresees a rise in company collapses in an article in the latest edition of the Hilton Malcolm Quarterly Economic Review.
It states: "The Review is concerned that the GDP growth, which it predicts at 2.9 per cent for 1995, has become too dependent on the export boom and, in the absence of domestic stimulation, will falter badly if exports weaken.
"Faltering growth will in turn see an upsurge in the number of company insolvencies from 1996 onwards, which will hinder growth prospects for UK companies."
Touche Ross is bucking the trend by preparing to lay off insolvency staff. But this is because the gigantic task of liquidating Bank of Credit and Commerce International, which crashed four years ago, is winding down.
The huge forensic task of sorting out multi-billion-pound frauds spanning 60 countries is nearing its end, while the action switches to the courtroom, where the lawyers are expecting lucrative litigation work for years to come.
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