Duncan Ainscough of Gordon Brothers discusses EU insolvency with regard to auctions.
About this segment of Blackbird TV
Recorded: December 7, 2020
Published: January 5, 2021
I would like to introduce my longtime friend. Duncan Ainscough who’s the managing director of Commercial and Industrial for Gordon Brothers. Duncan. Thanks for being part of our project. Really appreciate it. What are you seeing right now in the UK and in Europe generally relative to insolvency and what’s happening with these borrowers? Firstly thanks for having me. Obviously my responsibilities here in London based in London, is it covers the whole of Europe and there’s a big constant? So we go Russia, Turkey, North Africa and little bit beyond sometimes as well. So a big territory, so lots of different dynamics at work. The one single one is obviously the pandemic which is which is global and it’s affected pretty much every European country the same, you know, obviously all the central banks have pumping money in left right and center. So the actual insolvency world that we play in is actually quite and down to virtually nothing in here. We are talking where we 7th of December and I mean virtually nothing there’s obviously still ongoing cases, but but the sort of bad code That were ready to fall fell very quickly the companies that were affected by directly by the pandemic in travel companies the hotel Leisure will to come on through and talk a bit about audio-visual and that sort of thing, you know, they they went during the summer. I guess. We saw a lot of assets in October / November time, but since then the new instructions, we talked to a lot of a lot of accountants all the receivers a lot of Administrators every day. They’re all quiet now. They’re all quiet in terms. Terms of instructions, but they’re all very very busy beavering away looking at potential restructuring and things and I think if we look at year-on-year insolvencies in Europe, I’ll take the big ones. Germany is down 35 percent UK’s down 42% France is down 30% and a similar metric I guess is the chapter 7 in the US and I’m reading year-on-year that’s down 32% So I think I think the picture seems to be the same. And so what we are is we were gearing up really Actually, yeah, I know essentially in the interesting part in Erie County where we’re based in Erie County New York without forty percent year-over-year between all bankruptcy filings. And nationally as you point out the sevens are down 32% Yeah, if we have this conversation in April or May we would have been saying all fourth quarter 2020. We’re going to be super busy and there’s going to be all this insolvency and and this can just keeps being kicked down the road. No one really knows what it’s going to stop and I’m curious if you have any Me any perspective from the European for you know from the European Vision side. Um, you know again, you know what I’ve said, it’s going Global European every country’s got the same problem. I think I think coming out of this different countries will fare differently Germany and UK where the insolvency process is much more rigorous will see a lot of companies falling over in may/june time when the money needs to be paid back in likes to Spain and Italy where there’s a lot more probably governmental support. They won’t be calling that money in as quick. So we’ll probably find That has a real tail on it the Spanish and Italian economies and probably the French economy where there’s a huge amount of government support the UK and Germany are very good at killing defunct companies. You know, they have a great process for doing it and all the strong economies do interesting perspective. The United States is very similar in its approach to bankruptcy is the UK is and the word that I’m getting from these interviews and talking with other professionals is the first maybe into the second quarter of 2021. However, we don’t know what to do Administration is going to do relative to more government stimulus, which if that happens could you know push this further into 2021 and we won’t be seeing as many as we would have anticipated similar to what we anticipated in the beginning of this year. So it really remains to be seen here in the US as to how it happens in a room. Well, I guess I need to come down to the UK peace now as well because come January the first we’re not in Europe, you know, we’re not been in Europe for officially since beginning of this year, but It really the break happens on January 1. So for the UK economy, you know, there’s the double whammy of brexit and covid and Loans need paying back all kind of coming q1. So q1 there was an awful lot of angst about brexit last year and then it got pushed through. What’s your personal opinion on that now and how do you anticipate that impacting particularly your business? Okay, so we’ll business so from the UK point of view and I’ve just come off a call on this very subject is we are I’m not sure about getting people out of the UK into Germany or into Spain or into France or anywhere to go and look at deal. We don’t know what what might happen. Now. That’s the kind of worse worse worse case scenario, but the reality is how do you plan for the eventuality that Germany you need a visa to go and visit now, I don’t expect that to happen. But if you if you do some contingency planning and say well what is brexit mean for our business. My first first issue is I want to buy deals not from the Okay, but from Europe in Euros, so I know we need the entities. We got the entities in Spain and in Germany, at least we can do that. So we don’t want to be buying from a UK entity if we do buy a deal and secondly well more importantly firstly how do you go and look at a deal now? I don’t think that’s going to be a problem. But if you if I talk to other members of my team, they want to factor that risk in today as we talk about q1. So that’s how you could idea to think about those things. It’s a good idea to think about those things. Yeah. Yeah, and so, you know the UK A economy is got some some some real real headwinds real heavens above and beyond what we talked we started talking about which is common in our time. It doesn’t seem like they’re going to make any any allowance for the fact that this is hitting the UK economy. The covid thing is hitting UK economy. Yes, it’s a crazy situation. But but that’s what we’re living with. So, you know, as we said you said earlier I think early 2020 we said okay by the end of this year. We’ll all be back at work but will be really busy, you know with lots of insolvencies. This is this is dragging now and we’ve also got a no wizard slightly different subject. But if you think about how how the automotive industry is the Germany so reliant on the automotive industry and the supply chain that involves with the turmoil and the disturbance not only in the technology piece, but also no one selling any new cars. I mean, that’s another problem that Germany’s get particularly going to Yeah, but we’re closing plants here with closing the Honda plant. As you know, there are thousands and supplies involved in that. You know, they’re all going to be pulling out the UK and so it is a real real who knows what’s going to happen. I you and I work through the tech bubble bursting in the early 2000s. We saw, you know, we did a lot of work in that industry. We went through that crisis with, you know, relatively unscathed in terms of industry and Manufacturing. We didn’t have a huge amount of insolvencies. Then this this one feels very different. Yeah, it does. It feels different to me to and and it is great to reminisce back that we really have known each other that long and it’s and it’s great to see you Duncan. Thanks for joining today on Blackbird TV. It’s great. We’ll have you on again. I do hope so. Cheers.