KPMG will not do any work to its former UK restructuring business Interpath Advisory in the latest outcome of the scandal surrounding the sale of bed maker Silentnight to a private investment firm.
The decision is part of KPMG’s attempt to fix your image after a series of sentences and investigations.
He also tried to temporarily remove the threat of a ban on bidding for British government consulting services withdrawal from the throw for new public contracts, the Financial Times reported Friday.
KPMG has sold its 550-person bankruptcy and restructuring unit, which has now been renamed Interpath Advisory, private equity fund HIG Capital in May for more than £ 350m.
Three months later, the Big Four company was fined £ 13 million by an industrial court over a conflict of interest in his former restructuring business when he advised Silentnight to take over in 2011.
KPMG’s sale of Interpath allowed the restructuring business to get the job from Big Four’s audit clients because it removed the possibility of a conflict of interest.
However, KPMG has now decided not to refer any business to Interpath, although there were no obstacles to doing so under the terms of the sale, people familiar with the matter say.
Liz Claydon, head of KPMG’s UK counseling practice, was one of the people involved in the decision, one of the people said.
Silentnight has been advised by KPMG’s restructuring advisers since 2010. Its collapse allowed HIG, the same fund that later bought KPMG’s restructuring advisory business, to buy Silentnight through the pre-packaging administration.
The tribunal found that KPMG had unfairly made misleading statements to the British pension regulator and pension fund, a lifeboat for members of the company’s failed pension plans, to help HIG settle the burden of Silentnight’s pension obligations as cheaply as possible. Liabilities are expected to be transferred to PPF.
HIG later paid a £ 25m settlement after the pension regulator said it had deliberately caused unnecessary illiquidity to Silentnight. The court findings were against KPMG, not Interpath, which this week hired former chief Marx and Spencer Stuart Rose as advisers.
Some in the industry have speculated as to whether KPMG will re-enter the restructuring market.
A three-year non-compete clause prevents her from accepting official appointments in the event of insolvency, but leaves him free to advise companies in the early stages of financial trouble, people familiar with the deal said.
KPMG is now renewing its advisory capacity for restructuring, people familiar with the issue say. He re-hired David Fletcher, a restructuring specialist, in June and is investing in his special situations group, which works for clients in financial difficulties. A number of restructuring partners in another company told FT they had approached them about joining KPMG.
Asked by FT in November whether the company would renew its restructuring expertise, KPMG UK CEO Jon Holt said: “We will not invest in [formal] illiquidity depends on your definition of restructuring. ”
On whether he intends to compete with Interpath and his colleagues, he said: “I don’t think so to a large extent. It depends a little bit on what we do. ”
Blair Nimmo, CEO of Interpath, said KPMG had not told him it would not transfer the business to his company. Interpath has not officially received any recommendations from its former company since they split, he added.
“I wouldn’t have a problem working with KPMG in a particular area,” he said. “Maybe they will feel that because of their independence they want to make a certain distance between them [us], which is fine. ”
Part of the reason for leaving KPMG was gaining independence, he added.
KPMG declined to comment.
Additional reporting by Daniel Thomas