A decline in business administrations is generally seen as good news for the economy as a certain level of stability returns to the UK. But the drop in insolvencies brings with it a decline in work for insolvency practitioners and a more competitive market for distressed business buyers.
Begbies Traynor is one of the insolvency groups to have witnessed this decline and the business has been forced to lay off staff as a result of the drop in profits. In fact, the firm has seen its profits drop by £2.4 million in the last financial year, down from the £5.5 million recorded in the year to the end of April 2012.
A statement from the business blamed the ten per cent decline in insolvency cases for the drop in profit. The accountancy group said that the number of insolvency cases was at a historic low in comparison to previous recessions, citing low interest rates and “lenient attitudes by creditors towards financially stressed companies”.
Ric Traynor, chairman at Begbies, commented: “Last year was a challenging period for our industry with the number of UK corporate insolvency appointments decreasing by ten per cent over the 12 months to 31 March 2013.
“In this environment we consider that we have delivered a solid financial performance for the year as a result of the ongoing management of our cost base, which has mitigated the impact of lower revenues.”
While insolvency practitioners are adjusting their workforces to match the current levels of business, we're also seeing business buyers change their approach to distressed firms. The odd mix of a harder financial climate coupled with the drop in availability of assets and companies has forced buyers to be at the top of their game if they are to have any chance of success. Demand is starting to outweigh supply but buyers are getting their act together, ensuring their affairs are in order and keeping a closer eye than ever on the market to make sure they don't miss out on an opportunity. 
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