One of Britain’s leading restructuring specialists has had to restructure itself after fewer companies went bust than it had expected.
Shares in Begbies Traynor fell by nearly 20 per cent after it said in a third-quarter trading update that it had been forced to restructure its insolvency, tax and support divisions because of fewer company failures and lower than expected demand for its tax advisory services.
The Manchester-based company expects the shake-up to cost about £3 million in severance pay and asset writedowns. As many as 35 staff could lose their jobs. Ric Traynor, executive chairman, said: “We have taken strong action to realign costs to enhance profitability at current levels of activity, following the disappointing trading performance in the year to date.”
Begbies, which depends on insolvencies for almost 80 per cent of its revenues, had expected its business to be boosted this year by an increase in stricken companies seeking its assistance. However, predictions of an upturn in insolvency work have not materialised.
Figures released last month by the Insolvency Service and the Office for National Statistics indicated that, in contrast to previous downturns, the number of businesses that went bust in Britain last year fell by 17 per cent to 20,954.
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Shares in Begbies closed down 9¼p, or 15.9 per cent, at 49¼p yesterday, the lowest since December 2004.