Its natural instinct is for the larger international jobs - it is handling the Peregrine liquidation in Hong Kong, for instance - which may explain its reputation among professionals and some lenders for high fees. But the fact that PwC covers all the bases means that it is a formidable force, with the best resources for turnaround or insolvency work in the UK. The PwC colossus would have been rivalled by the combined forces of Ernst & Young and KPMG. As it is, both Ernst & Young and KPMG are PwC's major competitors within the Big Five, and had the merger gone ahead it would have made an interesting mix. Like PwC, both have international reach, with KPMG in particular being successful on major turnarounds and insolvencies in Asia - it is handling Japan Leasing, for example. KPMG's national spread - it is particularly strong in the Midlands and Scotland - gives it a domestic edge, while at Ernst & Young the cultural emphasis is on highly complex and high-value restructurings and insolvencies; it has Canary Wharf and Barings on its CV. The insolvency Big Five is rather different from the general accounting Big Five. It includes the three firms mentioned above, plus Deloitte & Touche which after a spell in the doldrums, appears to be bouncing back. The effervescent Nick Dargan is leading a marketing charge which has had lenders and lawyers taking notice of the firm once more. Grant Thornton moves up The other elite player featuring in the insolvency Big Five is Grant Thornton, which is increasingly being involved in top-line restructurings and insolvencies. Arthur Andersen is rather off the radar screen, despite its dominating presence in the last recession, when Murdoch McKillop and John Talbot handled such jobs as Leyland-DAF and Ferranti. Arthur Andersen does not even figure among the top ten for receivership work in the year ending June 1998. Still, the urge to merge among the accountants has been a dominating theme. BDO Stoy Hayward took over the southern offices of Moores Rowland, while Pannell Kerr Forster and Robson Rhodes got as far as initial talks. In the light of this, Buchler Phillips' success rather stands out. Firmly independent, the firm remains wedded to its niche status - it has no audit or tax division - and has reaped the rewards. It is considered by users and competitors alike as a quality player, despite its size. The number of law firms active in insolvency and restructuring is much greater than the accountants. As the insolvency accounting sector consolidates by merger, the legal insolvency sector appears to be going the opposite way, fragmenting more each month. There have been so many individual moves that some clients seem bewildered by it all. It all started about two years ago, at the height of the boom in the City, when a number of London law firms started hiring insolvency specialists. They had learnt from experience. In the last recession, back in the early 1990s, a number of them were caught out: with no insolvency or restructuring specialists, they could not get the big jobs. Instead, the large collapses were concentrated in very few hands. Allen & Overy (which handled Canary Wharf), Lovell White Durrant (which handled BCCI), and Wilde Sapte (which handled Leyland-DAF) were among the busiest. Of course, Lovell White Durrant's close relationship with Barclays, and Wilde Sapte's with NatWest certainly helped consolidate their positions. Allen & Overy came out of the last recession with the reputation of being the premier insolvency firm in the City, but nowadays there is a smaller gap between it and its competitors. Although it is putting into place a 'global product line' of insolvency and restructuring, it has serious competition from the likes of Clifford Chance, Linklaters & Alliance and Lovell White Durrant - all of which have invested in their international networks - and, at home, from Wilde Sapte. Strategic poaching The sudden entrance of Linklaters and Herbert Smith onto the scene is due in large part to their strategic poaching of key insolvency lawyers. Linklaters & Alliance stunned the legal market in 1997 when it hired a team from national firm Dibb Lupton Alsop. Up until then, Linklaters had by and large eschewed lateral hiring, preferring to grow its own. In the same year, Herbert Smith recruited Stephen Gale from national firm Hammond Suddards to set up a new insolvency and turnaround practice. In both cases, Linklaters and Herbert Smith - which missed out on advising on the large collapses in the last recession - wanted to shore up their domestic insolvency and restructuring base. The move paid off: at Linklaters, former Dibb Lupton partner Tony Bugg is now handling the insolvency of telecoms operator Ionica - one of the biggest jobs of the moment. And at Herbert Smith, Stephen Gale's team is advising on the provisional liquidation of P&I Club Ocean Marine Mutual - one of the few substantial collapses around. More recently, top five City practice Freshfields has started to build up its insolvency practice, hiring Sandy Shandro from Clifford Chance and Chris Mallon from Biddle. But it is, as always, the international work which has caught the eyes of the City law firms. As one might expect, the major bank-led restructurings - the real growth area - are the preserve of the large, finance-based practices such as Allen & Overy and Clifford Chance. With the UK and other EU economies in fairly healthy shape, City law firms have focused in the main on Asia and Russia. Opportunity for Chance When Hong Kong investment bank Peregrine collapsed in the autumn of 1997, Clifford Chance was called in to advise on the liquidation. For Clifford Chance - whose insolvency group was then reeling after the unscheduled departures of no fewer than three partners - Peregrine was a key job. But for all the seeming glamour of international insolvency and restructurings, the bread-and-butter work takes place in the UK. Practices with strong relationships with the banks and a national spread, such as Dibb Lupton Alsop and Hammond Suddards (which itself took on former Dibbs managing partner Paul Rhodes to beef up its insolvency practice) have traditionally flourished. - Mathew Lyons is managing editor of New City Media's Insider's Guide to Legal and Professional Services: Corporate Rescue and Insolvency The Insider's Guide to Corporate Rescue & Insolvency retails at £32.50. But readers of Accountancy Age can buy it for £24.00 (plus £2.95 p&p) - a saving of over 25%. To order, phone Edward Bannell at New City Media on 0171 440 7495, or fax 0171 831 3171. Offer ends 29 October 1999. ACCOUNTANCY FIRMS TO WATCH GRANT THORNTON ***** Despite not being one of the Big Five, Grant Thornton is firmly in the top tier for insolvency and restructuring. If it can bolster its international practice, its larger rivals will have to look over their shoulders. PRICEWATERHOUSECOOPERS **** A giant among giants and strong in every single sector of the market, from the large and complex jobs to volume liquidations. More stars than you can shake a stick at. BUCHLER PHILLIPS *** They said it couldn't be done, but Buchler Phillips has managed to build one of the most credible insolvency and turnaround practices in the country without the benefit of a tax or audit base. Don't underestimate the firm's ambition. BAKER TILLY ** Rapidly expanding, and strong in the South; one of the best choices for the SME sector. BEGBIES TRAYNOR * Huge growth in the past two years has put BT on the map; one of the few smaller firms strong both in the South and the North. Source: New City Media TOP OF THE CROP The leading insolvency accountancy firms, as rated in the guide, are: PwC ***** KPMG **** Ernst & Young **** Deloitte & Touche *** Grant Thornton *** Arthur Andersen ** Buchler Phillips ** BDO Stoy Hayward ** Pannell Kerr Forster * Robson Rhodes * Also recommended: Baker Tilly Begbies Traynor Horwath Clark Whitehill Levy Gee Mazars Neville Russell Poppleton & Appleby Smith & Williamson Source: New City Media.
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