“Wave” of insolvencies to hit Britain

A WAVE of business insolvencies will hit Britain once government furlough schemes come to an end, warns Begbies Traynor chairman Ric Traynor.

“There is very significant distress out there, there is a bow wave of problems,” he told the Standard.

Begbies profits for the half-year fell from £1.9 million to just £500,000 as insolvencies actually fell as companies went into Covid hibernation.

Once Chancellor Rishi Sunak pulls back on support, “a bow wave” of business failures will crash on to the economy, with tens of thousands of firms going under.

“There are plenty of companies that are just avoiding insolvency to claim furlough money to protect staff,” he adds. “Once furlough ends they will have to go down the insolvency root.”

Begbies, which has more than 70 offices across Britain, expects to earn good fees for advising those distressed companies. The recession will be at least as bad as the 2008/2009 financial crash says Traynor.

The company’s property arm was also hit hard in lockdown one, since surveys were banned. That has eased lately.

Begbies has been able to cuts its own debts from £2.3 million to £700,000. The interim dividend goes up a touch to 1p.

The shares were steady today at 90p which values the business at £119 million.

They peaked at 108p in May.

Begbies could look for deals to grow.

"With the benefit of our strong financial position we continue to look for opportunities to develop and enhance the group, both organically and through selective acquisitions, and we remain confident in our outlook for the current and future years,” said the statement to the City.