Insolvency trade is booming, says Begbies

The soaring number of corporate insolvencies has driven up full-year profits at the restructuring specialist Begbies Traynor, it revealed yesterday, saying that it had not yet seen "any green shoots" of economic recovery.

Revenues at its insolvency unit grew by 30 per cent and its staff increased by 22 per cent to 427 in the year to 30 April. The division, which accounts for 80 per cent of the group's total revenues, plans to recruit a further 50 staff this year to deal with the extra workload.

Begbies Traynor's performance demonstrates how restructuring companies are prospering in the recession as businesses buckle under financial pressures and falling demand for their services.

Ric Traynor, the co-founder and executive chairman of Begbies Traynor, said it had far more insolvency cases to deal with at the start of the current financial year than it did at the same time last year. "It is our time in the cycle and we see that continuing for a number of years," he added.

The company's adjusted pre-tax profits were 40 per cent higher, at £9.8m, while total revenues were up 29 per cent at £62.1m for the year. "I was always sceptical about all the talk of green shoots and now we are realising there are not any," said Mr Traynor. He expects total UK corporate insolvencies – which rose 37 per cent to 22,000 in 2008 – to be "significantly above" the peak levels of the last downturn in 1992, when they nearly hit 30,000.

In 2008-9, Begbies was called in to deal with nearly 1,800 corporate insolvencies – 38 per cent more than the previous year. Of those, two of the most high-profile cases were Exchange Insurance and Southampton Football Club. Yesterday, the club was sold to a company controlled by the Swiss business tycoon Markus Liebherr.

While revenues at Begbies Traynor's tax division increased to £7m from £2.6m the year before, £2.7m was from prior acquisitions and its second-half performance fell "below management expectations". Its corporate finance unit posted a loss of £1.1m after its revenues more than halved from £4.8m to £2.3m, as merger and acquisiton activity virtually ground to a halt.

The company proposed a final dividend 13 per cent higher at 1.7p, giving a total of 2.8p for the year.