BRI Ferrier: Unemployment key to rising insolvencies
21 Nov 2008 3:26 PMBy Alison Bell
MELBOURNE, Nov 21 AAP - The level to which unemployment rises next year will be key determinant to whether distressed companies are able to trade their way out of trouble, one of the nation's top insolvency expert says.
Ian Ferrier said the demand for goods and services created by near-full employment helped distressed companies to trade their way out of trouble rather than be placed into liquidation.
Mr Ferrier said the unemployment rate would determine if corporate insolvencies spread beyond the property and retail sectors.
Mr Ferrier was speaking after the launch of BRI Ferrier on Friday.
"The good news is that in Australia at the moment there is near full employment - that will help underpin reconstruction," Mr Ferrier told AAP.
Insolvency firm Ferrier Green Krejci Silvia (FGKS) on Friday joins forces with BRI Partners to form BRI Ferrier.
Insolvency expert Tony Hodgson is a consultant to FGKS.
The new company is a specialist reconstruction and insolvency firm with more than 100 staff and offices in Sydney, Melbourne, and Adelaide.
The firm's priority is reconstructing troubled mid-tier companies on the brink of collapse, Mr Ferrier said.
"You've seen the major financial institutions where they've encountered distressed debtors, searching for reconstruction," he said.
"You saw it in Allco before it went belly up, you see it in Centro at the moment and in many other companies. The experience to date is that the mostsophisticated second-tier companies are being encouraged to reconstruct."
BRI Partners' business has grown over the past four months thanks to tighter lending criteria applied by banks, which has driven a rise in insolvency numbers in Melbourne.
"The banks are looking more carefully before they lend," BRI Partners managing partner Ken Sellers said.
"That means more work for us in terms of reviewing some of their customers to see what potential problems they might have and how those can be resolved.
"The general feeling is that Sydney is in a worse economic position than Melbourne and that flows through to the number of insolvency assignments."
Sydney insolvencies were generally confined to the property sector, Mr Sellers said.
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