Begbies Traynor says insolvencies to lag recession

By Matt Scuffham

LONDON (Reuters) - Begbies Traynor (BEG.L), which helps salvage struggling companies, said on Thursday it expects to see more firms going through insolvency procedures than normal for several years after Britain comes out of recession.

Executive Chairman Ric Traynor, who co-founded the business in 1989, said historical precedents show insolvencies lag the end of a formal recession for at least a couple of years.

"When the technical recession ends in the third quarter or towards the end of this year, we expect (insolvency) numbers to continue to increase," Traynor told Reuters in an interview.

"We expect numbers to be at a higher level than the long-term average or base level for the next four or maybe five years. We're looking at a medium term of extreme activity in the restructuring world which we're well-positioned to take advantage of," he added.

In 2008, the total number of insolvencies in Britain was around 22,000 and Begbies expects that number could rise above 30,000 in 2009 and 2010.

"We expect 30,000 will be breached either this year or next, and maybe both. They will start to decline after 2010 but won't get back to the steady state of around about 16,000 corporate insolvencies a year for maybe even five years," Traynor said.

Manufacturing, engineering, retail, and property are the sectors seeing the most insolvency activity at present, he said.

The company reported an adjusted pretax profit for the year to April 30 of 9.8 million pounds, compared with 7 million pounds the year before.