Insolvency Practitioners Expect Things to get Worse

More than 80% of insolvency practitioners (IPs) expect their workload to increase during the next 12 months, according to a survey by law firm Lawrence Graham.

The findings come from a survey of 177 attendees at the Lawrence Graham insolvency & restructuring conference held on 8 November.

41% of IPs expect double digit growth in the next 12 months. Another 42% expect growth, but by less than 10%.

Respondents said the government's spending review would lead to an increase in administrations in vulnerable industries such as construction, retail, property and hospitality.

More than 70% felt there would be an increase in law firms entering administration over the next 12 months, following the collapse of Halliwells this year.

Steven Cottee, partner corporate recovery and restructuring Lawrence Graham, said, "As a result of the failure of Halliwells, banks are now taking a tougher attitude in lending to law firms, this will make many firms both large and small vulnerable, particularly when partners' tax bills have to be paid in January."

Some delegates (33%) believed the introduction of SIP 16 was responsible for the decline in pre-pack administrations, where an IP arranges the sale of the business prior to it entering a corporate insolvency process. SIP 16 reports were initiated to bring greater transparency to pre-packs and is produced by the IP.

Of all respondents, 67% felt the reports enabled them to demonstrate more clearly to creditors why a pre-pack was the best choice for a business.

Tom Withyman, head of corporate recovery and restructuring Lawrence Graham, said, "There appears to be strong support within the profession for SIP 16. The majority of IPs agree that it has led to more transparency and better explanations to creditors as to why a pre-pack was the best option."

Posted at 04:24PM Nov 12, 2010 by Marc Stenton in Sport Finance  |  Comments[0]