‘Corporate Undertakers’ saved nearly 2 million jobs in 2009
With the latest unemployment figures out tomorrow, new research by ComRes estimates that the UK’s insolvency industry helped to save nearly two million jobs in companies going through insolvency and rescued around six thousand (5,851) businesses last year. Furthermore, the UK’s Insolvency Practitioners who work on corporate insolvencies spend nearly a quarter of their time on preventing insolvencies, work which cannot be made public for fear of damaging the value of the businesses concerned.
“One might assume that when an Insolvency Practitioner (IP) walks through the door of your business, it is time to clear your desk, but the reality is very different,” says R3’s incoming President Steven Law. “If the IP can get in early enough, often the business, or parts of the business, can be saved by insolvency procedures such as administration or Company Voluntary Arrangements (CVAs). Two million jobs equates to around 7% of the working population. Also an overlooked part of our role is helping businesses and individuals avoid insolvency in the first place.”
Other research by the cebr also demonstrates the vital role the insolvency industry plays in creating an environment in which “creditors are willing to lend, entrepreneurship is encouraged and the economy can flourish”. World Bank data shows there are only 6 countries in the world where the amount recovered for creditors in an insolvency is higher, extracted over a shorter time and at a lower cost than the UK (Japan, Singapore, Norway, Canada, Finland and Belgium).
Steven Law concludes: “We rank above the US on these criteria, which highlights that during this recession, the insolvency regime has generally performed well. World Bank data showed the UK insolvency regime was able to recover 84 cents in the dollar for creditors and only at a cost of 6% of the value of the estate.
“This latest research also showed that the UK insolvency industry made a direct contribution of around £562 million to national GDP. It is time to think of the profession as financial healthcare specialists rather than corporate undertakers. The earlier a company director faces up to their financial problems, the better the diagnosis is going to be.”
Note to editors:
- R3 commissioned ComRes to conduct research to update the Value of the Insolvency Industry Report produced by the cebr in 2008. This report addresses the state of the industry and the practice as a whole in the UK. Using up to date data on the economic contribution of the industry; the number of insolvencies and IPs; and detailed research among IPs, through the R3 Membership Survey, ComRes has addressed each of the key factors in identifying the value of the insolvency industry. ComRes interviewed 402 insolvency practitioners across the UK, all of whom are members of R3. The interviews were conducted online between 4th and 23rd February 2010. The results have been used to extrapolate and model all IPs in the UK. In particular, part of the survey addressed the detail of the nature of the last five corporate insolvency cases they worked on. These cases have been used to model the state of UK businesses which have gone through insolvency procedures. Combined with analysis using data from the Office of National Statistics and the Insolvency Service, ComRes calculated the value of the insolvency industry through its multifarious contributions to the wider economy.
- In 2008, the Centre for economics and business research (cebr) conducted an independent study into the economic significance of the insolvency sector and its potential future contribution to United Kingdom prosperity.
- ComRes’s recent research finds that the UK insolvency industry helped saved nearly 2 million jobs (1,951,743) in 2009. According to figures from the Office for National Statistics (ONS) there were 21.16 million in full-time employment and 7.70 million in part time employment for the three months to January 2010, of which the 1,951, 743 equates to 7% (of the working population).
R3 Press Office