Insolvency firm Begbies Traynor lifted by Paperchase collapse

Begbies Traynor has reiterated its annual forecasts following an ‘encouraging level’ of new insolvency work, including its appointment as Paperchase administrator.

Analysts expect the corporate restructuring specialist to make between £117.7million and £124.4million in turnover, and adjusted pre-tax earnings of £19.7million to £20.6million for the current financial year.

Having seen revenue rise by 12 per cent and pre-tax profits nearly double in the six months ending October, the Manchester-based firm said demand in the following three months had been strong.

Insolvency: Begbies Traynor was appointed as Paperchase’s administrator in late January following the stationery chain’s collapse amid tougher competition

Trading has been buoyed by a surge in British companies going bust during the past year under the weight of acute cost pressures, interest rate increases and slowing consumer spending.

According to the Insolvency Service, 22,109 businesses went under last year, the highest number since 2009 and 57 per cent up on the prior year. 

The hospitality, construction and retail industries have been among the most badly affected.

Among retailers to have recently fallen casualty to economic pressures is stationery chain Paperchase, which has been affected by tougher competition and declining footfall at its railway station outlets amid the trend towards hybrid working.

Soon after Begbies was appointed as the group’s administrator in late January, it made 75 central office staff at Paperchase redundant and sold the firm’s intellectual property and brand to Tesco.

Yet the supermarket giant did not acquire Paperchase’s 106 stores; as a result, they will be closed in the coming weeks with the loss of approximately 900 jobs.

Begbies has also recently overseen the administration of rugby union side Worcester Warriors, which disbanded on 9 February more than 150 years after its founding, and pioneering fairtrade organisation Traidcraft. 

Besides insolvency work, Begbies noted a healthy pipeline of demand in its financial and property advisory divisions, as well as its transactional services arm.

Ric Traynor, the company’s founder and executive chairman, said: ‘We have continued 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 investment.’

The volume of insolvencies will likely remain elevated during the coming year, given the continued impacts of sky-high energy prices and successive interest 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 placed to capitalise on it for some time, and the work may well come in a steady flow over a multi-year period.’

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