A survey of over 140 insolvency practitioners (IPs) carried out earlier this month found that 79% of those polled expect their workloads to remain at the current 10 year low or decrease even further in the next year.
The publication of the research comes as the Insolvency Service today announced that company liquidation rates are now the lowest on record and administrations have decreased by 18.8% against last year.
56% of those IPs surveyed see low interest rates as the most significant factor influencing the current low levels of insolvencies but improving economic conditions mean that many insolvency practitioners believe insolvencies will continue to remain low or decrease, despite economists predicting the first Bank of England rate rise since 2007 to be announced next year.
Professional practices is seen the sector that is most likely to suffer casualties, with 40% of IPs predicting a rise in formal insolvencies next year. This is followed by the retail sector (29%), health including care homes (22%) and the real estate sector (9%).
Steven Cottee, a restructuring partner at Pinsent Masons, said: “The current continued low interest rate environment and continued forbearance by the banks, has contributed to the lowest number of insolvencies for 15 years. Improving economic conditions are leading to even fewer insolvencies. With the predicted rise in interest rates pushed back yet again the insolvency industry is down beat about work prospects.”
Steven Cottee added: “Professional Practices, including in particular law firms, are still finding the economic climate very challenging. Prominent firms such as Cobbetts, Halliwells and Tods Murray have all fallen victim to the trading environment over the past few years.”
The survey also showed that the vast majority (70%) view proposed changes to the pre-pack regime, recommended in the Graham Report, unworkable.
Steven Cottee said: “Pre-packs have always been a hot topic and it appears that despite the Graham Report the issue will not be going away soon and a large number within the insolvency profession are very sceptical about the workability of the key recommendations of the report. While the industry has been asked to adopt these measures voluntarily, they could be faced with further government legislation if the measures fail to have the desired effect”.
Pinsent Masons surveyed 140 insolvency practitioners at the annual Restructuring and Insolvency Conference, the largest Insolvency conference in Europe.