News last week that five top corporate restructuring partners at KPMG and Deloitte had handed in their notice and plan to join forces to set up an Irish operation of UK-based debt restructuring boutique Interpath Advisory grabbed the attention of those in the Irish professional services industry.
KPMG’s high-profile corporate restructuring partners Kieran Wallace and Eamonn Richardson will resign with effect from the end of April 2023, while Deloitte partners Ken Fennell, Mark Degnan and James Anderson have quit with effect from the first quarter of next year.
Interestingly, London-based Interpath’s seven-person board have worked for one or other of the two Big Four firms in their careers.
Are the Irish partners on gardening leave? This is complicated by the fact that they have existing appointments that require ongoing work. For example, Wallace and Richardson are the joint liquidators of IBRC. Even nine years on from the liquidation, it requires active supervision but it is the person rather than the firm that the court appoints in such cases.
But it has been a good fee-earner for KPMG over the years. Do Wallace and Richardson continue to work on the liquidation (probably from home) with the fees going to KPMG? Will Wallace and Richardson take such appointments with them when they eventually move to Interpath? In theory yes but this has never been tested before.
Why would a company like Interpath be interested in the Irish market, which is small in a global context?
One view is that the broad insolvency space (and it means different things in different countries) has increasingly become globalised. The ripples from the collapse of German payments group Wirecard, for example, saw Fennell and Anderson appointed as joint liquidators of the Irish units. Companies such as Interpath locate themselves strategically to bag such assignments, which can be highly lucrative.
A year ago, advisory firm Teneo, formerly led by Irishman Declan Kelly, announced the acquisition of the restructuring business of Deloitte UK. Last month, it bought KPMG’s Cayman and British Virgin Islands restructuring business. In Ireland, it hired Damien Murran, a partner with accounting firm RSM, to lead its restructuring services unit.
Interpath and Teneo don’t face the conflicts that impact on Big Four firms, which act as auditors to most of the world’s major corporations. The landscape is changing and it will be interesting to see how this ultimately plays out in the Irish market.