Complete Package: Corporate recovery and insolvency
The Covid-19 pandemic is putting businesses of all sizes and across all sectors under tremendous pressure and will unfortunately lead to failures, perhaps on a large-scale. The corporate recovery and insolvency (CR&I) practitioner is ideally positioned to provide expert advice in this time of need, says Sam Talby FCCA, partner at UK practice PCR.
‘Regardless of various funding initiatives, some businesses will become insolvent and will need to be placed into administration or liquidation,’ adds Talby. ‘It’s important for SME owners to seek help as soon as possible, because the earlier we’re involved, the more likely a rescue can be delivered.’
On the one hand, CR&I requires working with underperforming and distressed companies with a view to turning them around, and returning them to stable financial positions and profitable trading. On the other, it involves winding up failing or failed businesses.
With Covid-19, the disappearance of markets and customers will cause a liquidity crisis among large swathes of the business community. ‘Business owners need to determine and assess the severity of their business situation, and plot a way forward in the immediate weeks and months ahead,’ says Tom Murray FCCA, a director at Friel Stafford in Ireland. CR&I practitioners can help.
Practitioners also carry out solvent liquidations as a corporate simplification process by winding up solvent companies that have come to the end of their purpose. However, for some, a solvent liquidation is not possible and they will need to enter a formal insolvency procedure.
‘We take charge of the company, realise its assets and distribute them to stakeholders,’ Murray says. ‘We also investigate the reason for the collapse and make a report to a government body on the conduct of the directors. We may have to take legal to restrict or disqualify directors from acting as directors depending on the investigations.’
CR&I is a highly technical role that requires forensic-like analytical skills and a broad knowledge of business and sectors, accompanied by a legal mind: ‘We work in an arena where the worlds of accounting and law intermingle and blur frequently,’ says Murray.
Also key are the softer skills, as practitioners work with people, such as business owners, in often difficult times. To this end, Talby believes empathy, backbone and ‘a well-defined sense of humour’ are key.
Getting in and getting on
‘The ACCA Qualification is continues to be invaluable to me,’ says Talby.
He also notes that CR&I is a career that can require other qualifications, (for example, the Joint Insolvency Examinations Board exam in the UK), and at least five years to become grounded, ‘but the financial and job satisfaction rewards are there’.
As well as a path to partner within a practice, a career in this field can lead to roles in industry, as you’ll be equipped with a strong set of practical business skills and an understanding of corporate governance issues.
This article was first published in the May 2020 China edition of Accounting and Business magazine