Amid heightened concerns about companies’ cash crunch due to the spread of the coronavirus, small- and mid-sized companies’ non-performing loans (NPLs) are expected to be put up for sale, which is reviving advisory firms’ restructuring division.
Some accounting firms are seeking to add corporate restructuring professionals, said investment banking sources on Tuesday. Major accounting firms like Deloitte Anjin have scouted directors from mid-sized accounting firms while others have reportedly hired managers who will deal with NPLs.
Firms’ restructuring divisions have been suffering from manpower shortages for a long time. At some accounting firms, including Samjung KPMG, partners have moved to asset management firms while directors left an accounting firm to find a new job.
Against this backdrop, some accounting firms began actively searching for restructuring professionals, expecting an increase in restructuring activities in the near term. South Korean companies are currently facing a severe cash crunch. The outbreak of the novel coronavirus has put the companies in a difficult position to raise money through an ordinary way, including an issuance of corporate bonds amid a drop in operating cash flow. For instance, a company sold its bonds with a credit rating of AA in a private placement rather than public offering.
Firms have also hired junior accountants in a bid to increase workload. Although salaries for accountants with four to five years of work experience have risen, the shortage of manpower may be solved sooner or later given restructuring divisions normally provide attractive pay and working conditions.
Market insiders expect some NPLs to be put up for sale while the corporate restructuring industry is preparing for a possible corporate rehabilitation program and workout practice. Domestic NPL market, which has lost its vigor due to ample supply of liquidity provided by the government, is likely to revive once NPLs and secured bonds flow into the market. In the same vein, companies in some industries such as tourism and fashion may enter a rehabilitation process.
Advisory firms have listed and contacted some mid-sized financially-troubled companies in order to be hired as a lead manager by forming networks with potential clients beforehand. (By reporter Choi Ik-hwan)