To members of the public, the profession can often suffer from mixed messages, inaccuracies and a few rogue traders. My friends know me as the financial undertaker and my hairdresser calls me Mr Terminator. They seem to think I go around shutting companies down and making people redundant. If anyone has seen the film ‘Up in the Air’ with George Clooney….despite some similarities to him….I don’t do that for a living.
I can’t deny that this is not part of the job, because it is. Although, just to be clear, 99 times out of 100 it is the director of these companies that have come to us for advice and then asked us to help them to bring the company to a close.
But there is more to insolvency and the restructuring profession than just closing companies down.
The Association of Business Recovery Professionals (R3) have just released some interesting figures in relation to the industry and it centres around the lighter side of restructuring, the side where due to our advice and assistance, jobs and businesses are saved.
Wherever possible, we work with insolvent businesses and their creditor's using the insolvency tools and laws available to us, to try and rescue the businesses that we are advising. We are always trying to maximise the recovery for the company’s creditors and the best way to achieve this is nearly always by way of a business rescue.
The most striking figure from the recent press release is that 42% of businesses that entered into a formal insolvency procedure in 2013-2014 continued forward in some form. In London and the South East there were 5,300 corporate insolvencies and the profession was able to rescue approximately 2,220 businesses saving around 72,500 jobs.
Unfortunately people don’t tend to hear about this side of insolvency in the news, as we all know, you hear the bad stuff, the job losses, the industries failing and the creditors suffering. Even as a write this I am watching BBC News report breaking news on the closure of Redcar Steelworks and the loss of 1,700 jobs.
I feel like the profession is slowly beginning to change peoples attitude about the industry but I do understand that this will take time and due to the often negative connotations we may never fully get there. The important thing for people to take from this blog and these figures is that formal insolvency procedures are often solutions used to deal with a problem, whether it is an informal agreement with creditors, a liquidation, administration or a CVA, these are all tools which can be used to save businesses and jobs.
As always, if you or a client of yours feel like they're in a spot of trouble, get them to take advice early, the earlier that professional help is sought the greater the options that are available.