Barkers’ demise: Howard warns of impact on industry

The news of Barkers' demise will doubtless continue to reverberate around the recruitment communications industry.  Rumours had been gaining strength all last week that the business was in trouble - especially north of the border, where queries over the status of its Scottish offices were left unanswered.

In fact bids had already been invited from a number of industry players in a ‘pre-pack'* process run by administrator Chantrey Vellacott DFK.  And it's the nature of the deal that raises wider concerns for the industry at large, according to Work chairman Simon Howard, whose own group was one of the unsuccessful bidders for Barkers' assets.

"I was asked if we would be interested in putting together a rescue package for Barkers," he told Ri5.  "We worked hard at an offer, but in the end Penna's pockets were deeper.  There will be many in the media who will be feeling very sore, but their anger shouldn't be directed at Barkers' management or indeed Penna - they both worked hard to save what they could."

Simon adds that time apparently started to run out for Barkers when the auditors refused to sign off their accounts without greater reassurance about future funding, which neither shareholders nor bankers were prepared to provide.  "The big losers in all this are the media, who will not be paid," he says.  "However the bank walks away scot-free, having recouped its borrowings and effectively shafted the media."

In consequence of this, other recruitment ad agencies will no doubt be bracing themselves as the NPA and other recognition bodies put them under the microscope - which Simon thinks is unfair.  "I've been around long enough to know that, over the years, the ad agencies collectively have borne more in bad debts from clients than the media have from agencies going bust," he says.  "What's more, the media have also acquiesced in accepting bookings from ‘phoenix' agencies, even when the same management and ownership is left in place."

Ironically, Simon also tried unsuccessfully to buy BNB back in 1999.  We'll leave him with a typically forthright last word: "Of course, you shouldn't forget that the ultimate culprits in all this are the previous regimes of BNB management, who have destroyed a once great company."

* ‘Pre-pack' deals are of course perfectly legal and above board, taking advantage of changes to insolvency legislation introduced by the present government.  They are an increasingly accepted way of enabling companies in difficulty to leave their creditors behind.