A fall in companies going bust — good news for workers, but bad news for the UK’s biggest insolvency practice, Begbies Traynor, as annual profits slumped by more than half today.
Begbies scaled up operations in the early stages of the recession but was forced to rapidly change tack as the Bank of England slashed interest rates to 0.5% more than four years ago.
Chairman Ric Traynor may be one of the few businessmen in Britain actually looking forward to an interest rate rise. “Typically when we come out of a recession and rates begin to rise that’s when marginal businesses become non-marginal,” he said. “I’m sure there are plenty of savers out there [who want a rate rise] but in terms of running a business you’re probably right.”
Traynor estimates that of 200,000 on its “red flag” watchlist, about 50,000 may be unviable.
The number of UK corporate insolvency appointments fell 10% in the year to 31 March, when pre-tax profits fell 57% to £2.4 million. Although the firm handled failures including Port Vale Football Club, Pentagon Capital Management and United Carpets, overall revenues were down another 11% to £51.1 million.
Begbies doesn’t foresee any “improvement” in market conditions and is pencilling in another £2 million in cost cuts this year, on top of £8 million taken over the past two years.
