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Tuesday, 11 October 2011

Ernst & Young being sued over valuation of insolvency practice

Ernst & Young is being sued by the private equity firm Primary Capital, according to The Times, for £8.5m. The claim is that the accountants incorrectly valued its investment into Haines Watts, the business recovery practice which it bougth in 2006 before the insolvency practice entered into a pre-pack administration two years later. It was sold to RSM Tenon.

Without seeing the valuation we cannot comment.  However, many insolvency practices have found the expected increase in business failures has failed to materialize as businesses have been able to cut costs and banks have not moved to put businesses into administration.

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