Value and adverse press comment regarding the UK Insolvency Industry

The Times has published an interesting piece entitled "Advisers rake in £3bn from Lehman Brothers, Woolworths and other failed firms." The article makes interesting reading. Perhaps of more relevance though are the reader comments. At least one Insolvency Practitioner (IP) seems to have entered the fray. The Financial Times has also reported on a similar issue but with particular emphasis on Begbies Traynor.

One counter argument to these accusations of profiteering, and allegations of fat cat behaviour (pictured), could be to focus on the value that the insolvency industry brings to the UK economy in rescuing viable businesses. In terms of the value of the insolvency industry it is important to consider evidence. The Association of Business Recovery Professionals (R3) commissioned some independent research by the Centre for Economics and Business Research Ltd (not to be confused with Cambridge University's Centre for Business Research) in 2008 into the insolvency industry. The R3 research noted that the UK insolvency industry:

"employs 12,700 people

directly, including 1,744 licensed

insolvency practitioners, in

714 firms

• makes a direct contribution

to national GDP of

£780 million annually —

plus an extra £230 million

indirect contribution through

employees’ spending and

purchases from suppliers

• provides assistance to

businesses with a combined

turnover of £132 billion

each year

• helps to save 910,000 jobs

annually in businesses that

are suffering from solvency

problems

• is ranked ninth out of 127

countries for speed with

which it deals with troubled

businesses and tenth out

of 175 countries for the

amount it recovers for

creditors

• plays a vital role in

maintaining a business

environment in which

creditors are willing to lend,

entrepreneurship is encouraged

and the economy can flourish.

Our research demonstrates

that jurisdictions, like the

United Kingdom, that treat

creditors appropriately in times

of business difficulties are the

most likely to be prosperous in

the longer-term."

Picture Credit: http://images.theage.com.au/ftage/ffximage/2008/08/25/kitten_cream_narrowweb__300x450,0.jpg