Restructuring and Insolvency 2013—a year in review by Mike Jervis

Restructuring and Insolvency 2013—a year in review by Mike Jervis

The FTSE has risen 14.68% during 2013—it has not been the busiest year ever in the UK insolvency market, has it?

Mike Jervis, partner at PWC, reviews the year from an insolvency practitioner’s perspective.

Let me give you some thoughts on a whole host of interesting outcomes from 2013:

Zombie companies continued to walk

Despite exhortations from parties wanting to put a stake through the heart of such companies, banks and creditors have correctly identified that there is more value in a zombie preserving jobs and paying (some) creditors on time than the value lost through insolvency processes without a buyer. Some zombies that did fail, when restructured, failed again. For example, Blockbuster endured successive insolvencies in January and November 2013.

Corporate insolvency numbers continued to tumble

The administration total fell to its lowest level since 2004 and avoiding insolvency has become the new norm. Forbearance is key and large insolvencies should be planned insolvencies, like pre-packs of people businesses. Companies are consulting earlier, management teams are more careful, creditors are more supportive.

The pre-pack is alive and kicking

Pre-pack techniques continued to achieve the rescue of viable businesses and my memory this year is of people businesses being kept running precisely because this type of administration sale process is still available for viable companies: Manches, Seymour Pierce, Cobbetts, Lambert Smith and RSM Tenon

High profile debt sales

High profile debt sales have occurred and purchasers have demonstrated a genuine loan-to-own approach—the rescue of HMV exemplified this, where the new owner is genuinely interested in running a successful business. There are admittedly some less elegant examples, like Comet, but there always will be.

Company Voluntary Arrangements (CVA)

Large retailers discontinued the alarming trend of previous years when they thought—or were told—that the CVA was a panacea and a sure fire antidote to flawed bu

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