Partner Article

Legal experts discuss business insolvency

Experts from the region’s leading law firms will be gathering to discuss the long-term dangers of the recession at an event next week.

Representatives of Ward Hadaway, Dickinson Dees, Eversheds, Watson Burton and Clarke Mairs will outline the implications for businesses of changes to insolvency processes that are due to come into effect later in the year.

Insolvency practitioners in the North East believe that the full impact of the recession on the business community is yet to be felt.

During the last recession, the peak for liquidation was 1992, some three years after the recession had started, and R3 expects that this lag will again be repeated this time round.

Jim James, north east regional chairman of R3 and head of the Insolvency and Corporate Recovery Unit at Newcastle-based law firm Ward Hadaway, said of the ‘lag’ effect: “One of the reasons that occurs is that people don’t take stock of where they are when their business starts to turn around. They need to satisfy themselves that they have sufficient working capital to deal with the problems the recession has already caused them and the increasing amount of work that’s likely to be coming in.

“Not only have you got to be certain that you’ve got enough working capital, but that the people that you are working for have got enough working capital to survive.

“The recent announcement of the official end to the recession does not mean that all the problems caused by it have worked their way through – and as hard as insolvency professionals can work to try to save companies and safeguard jobs, we fully expect the number of businesses entering administration to continue to grow for some time to come.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .