More than two in five insolvent companies across the north of England have been rescued with the help of the region’s insolvency professionals, saving over 90,000 jobs in the process.
That’s the key finding of a new report by insolvency trade body R3 into the impact that its members have on the fortunes and prospects of troubled firms across the UK.
The report, Why Insolvency Matters: The insolvency profession’s value to the North of England, reveals that out of approximately 4,995 businesses across the North East, North West, Yorkshire and Humberside which entered a formal insolvency procedure in 2013/14, 2,070 were rescued and around 92,135 jobs saved.
Taking the North East, North West and Yorkshire and Humberside as a whole, the regional business survival rate of 41% is exactly in line with the national average.
The figures do not include those companies which took advice from insolvency practitioners, but managed to refocus their business without entering a formal insolvency procedure.
Speaking at the formal launch of the new report at a meeting of R3 North East members, regional chairman Allan Kelly, a restructuring partner with Baker Tilly North East, said: “The sooner insolvency practitioners’ advice is sought, the greater the chance of business and job rescue – our members witness first-hand the human cost of business failure and make every effort to protect jobs where possible.
“The UK insolvency regime is a fundamental part of the business cycle, helping to ensure that talent, assets and ideas are put to productive use and that creditors are repaid money wherever possible.
“The enhancements and improvements to this regime that R3 and its members have helped to secure over recent years, such as halting the implementation of the proposed Jackson reforms to the funding of insolvency proceedings and leading on the planned introduction of measures to secure continuation of essential IT and utility supplies for viable firms, now give struggling businesses their best chance of finding a way to calmer financial waters.
“The members of the North East business community are also generally very supportive of one another, and this can encourage a more proactive approach around seeking professional advice for financial problems at an early stage.”
There are around 25 insolvency practitioners in the North East out of approximately 1,750 in the UK, and around a fifth of the profession’s work with businesses across the UK involves general or pre-insolvency advice (22%).
Allan Kelly continues: “The figures in this landmark report demonstrate the importance of tackling the problems of struggling businesses early on, and our members are also increasingly helping businesses outside of formal insolvency procedures.
“There has been much talk recently of a ‘Northern Powerhouse’, which is very welcome, but that Powerhouse won’t function without an effective insolvency regime and profession to pick up the pieces when businesses fail or to help them avoid insolvency in the first place.
“This report demonstrates the undoubted importance of the profession to the Northern Powerhouse and we’re confident that it will continue to play a key role in the region’s economy for years to come.”