Insolvency firm Begbies Traynor lifted by Paperchase collapse

Begbies Traynor has reiterated his annual guidance following an “encouraging level” of new insolvency work, including his appointment as Paperchase administrator.

Analysts expect the corporate restructuring specialist to generate between £117.7m and £124.4m in revenue, and an adjusted pre-tax profit of £19.7m to £20.6m for the current financial year.

After sales rose 12 percent and pre-tax profits nearly doubled in the six months ending October, the Manchester-based company said demand was strong in the following three months.

Trade was aided by a spate of British companies going out of business over the past year under the weight of acute cost pressures, rising interest rates and declining consumer spending.

According to the Insolvency Service, 22,109 companies went bankrupt last year, the highest number since 2009 and 57 percent more than the previous year.

Hospitality, construction and retail are among the hardest hit sectors.

One of the retailers that has recently fallen victim to economic pressure is paper shop chain Paperchase, which has suffered from tougher competition and declining footfall in its station shops amid the trend towards hybrid working.

Shortly after Begbies was appointed manager of the group at the end of January, 75 central office employees at Paperchase were laid off and the company’s intellectual property and brand were sold to Tesco.

Still, the supermarket giant has not taken over Paperchase’s 106 stores; as a result, they will be closed in the coming weeks with the loss of about 900 jobs.

Begbies has also recently overseen the administration of Worcester Warriors, which dissolved on February 9, more than 150 years after its founding, and pioneering fair trade organization Traidcraft.

In addition to insolvency work, Begbies noted a healthy demand pipeline in its financial and real estate advisory divisions, as well as in its transaction services business.

Ric Traynor, the company’s founder and executive chairman, said: ‘We continue to perform well across the group and our outlook for the full year remains unchanged.

“This will extend our strong financial track record of growth through a combination of organic and acquisitive investments.”

Insolvencies are likely to remain high in the coming year given the continued impact of skyrocketing energy prices and successive rate hikes on the UK economy.

Nik Lysiuk, an analyst at Canaccord, said: ‘It’s the insolvency work that should lead to outperformance as Begbies have been in a position to take advantage of this for some time now, and the work could well come in a steady stream over a period of time. period of several years. ‘

Begbies Traynor Shares were 3.7 percent higher at 137p Monday afternoon and have grown by more than a quarter in the past 12 months.