Insolvency business is booming as firms go bust
SOME parts of the Irish accountancy profession are booming as Ireland's depression pushes builders, hotels and restaurants into insolvency.
A total of 113 companies became insolvent in Ireland last month, almost exactly twice the number in the same month last year.
"An ill wind blows some good," said Tom Fitzpatrick, who heads the corporate recovery and insolvency department at FMB.
"There's more and more effort going into avoiding the insolvency process, whether it be examinership or liquidation, through the re-organisation route or sometimes through voluntary agreements with creditors."
The Institute of Chartered Accountants in Ireland (ICIA), which is moving into shiny new offices on Dublin's Pearse Street, recently named Mr Fitzpatrick as the institute's new president. Other accountancy firms to have seen some benefit from the economic crisis include PricewaterhouseCoopers, which landed a lucrative role last month advising the National Asset Management Agency as the Government prepares to set up the 'bad bank'.
Workforce
While the insolvency business is doing well, accountants in general business are struggling.
The ICAI has seen a three-fold increase in members looking for free annual subscriptions which are given to accountants when they lose their jobs.
Salaries at Ernst & Young, KPMG, PwC and Deloitte have all been cut while KPMG let go 200 staff, or 10pc of its total Irish workforce, in May.
"Obviously, the difficult economic circumstances are impacting on ourselves and our members. Some of them have lost their jobs and we've got to try and help them through the difficulties. We're freezing subscriptions for the current year and we're trying to get a reduction in student tuition costs," Mr Fitzpatrick said.
"Part of the problem is that many good clients who would pay fees quickly no longer have the cash. It's incumbent on practices to help their clients through a recession and, very often, that means working for them even when you're not getting paid. That's presenting difficulties for some of our members."
Survey findings released by the Leinster Society of Chartered Accountants indicate that salaries for chartered accountants had tumbled to €126,200 at the beginning of the year, from €143,600 the same time last year.
The survey also found that the number of people receiving fringe benefits has declined.
Fewer than half the respondents now receive health insurance from their employer and the number of chartered accountants who have company cars now stands at 11pc compared to 17pc in 2004.
Over in the UK, accountants are also benefiting as companies such as Woolworths go into administration.
"The government is predicting that the economy should start picking up later this year but that doesn't mean that the number of corporate failures will decrease," said Peter Sargent, President of R3, a trade body which represents UK insolvency practitioners.
R3 forecasts that the number of corporate insolvencies in England and Wales will increase 31pc to 28,651 by the end of the year.
Privately-owned accountancy firms, PricewaterhouseCoopers LLP, Deloitte & Touche LLP, Ernst & Young LLP and KPMG International, defined by the Institute of Chartered Accountants as the four largest in Britain based on revenue, are seeing increased demand for their insolvency services.
"I would expect all of the major insolvency practices to be running at least 20pc up once it flows through into fees," said Malcolm Shierson, a partner at Grant Thornton.
"In terms of staff numbers, we're about 30pc up from where we were a year ago. I'd expect that to be reflected in turnover in due course."
Among publicly-traded companies, Begbies Traynor Group, a British financial adviser that gets more than three-quarters of its revenue from administering bankruptcies, posted a 30pc increase in revenue from its insolvency arm for the year ended April 30. (Additional reporting by Bloomberg)
- Thomas Molloy
