economic viability, in turn, becomes a matter of debate over accountants’ calculative technologies so that, at the end of the day, the accountants play as much of a role in constructing the events of insolvency as do lawyers, judges or involved parties.

The message for insolvency lawyers is that insolvency law, to be understood, has to be seen as a tool in the hands of different professionals, one that is manipulated in different ways by those groupings. The resultant processes are consequently not fully captured by images of legal definition and the mechanical transposition of insolvency law into practice.

Why companies fail

Companies can be said, in the main, to fail through either internal deficiencies (such as poor management) or pressures exerted by external factors (such as global credit crises).39 This section reviews the causes of failure and the concluding section considers the potential impact of insolvency law on these respective causes.

value of long-term debts and sales to total assets, see E. I. Altman, Corporate Bankruptcy in America (D. C. Heath, London, 1971).

39The R3 Twelfth Survey, p. 26, indicated that the three most frequently cited primary reasons for failure were: loss of market; loss of finance; and managerial failings (fraud; over-optimism in planning; imprudent accounting; erosion of margins; product obsolescence/technical failure; over-gearing). The normal risks of entrepreneurship have been said to cause 63 per cent of European business failures: see R. Meuwissen, G. Mertens and L. Bollen, Classification and Analysis of Major European Business Failures

(Accounting, Auditing and Information Management Research Centre and RSM Erasmus University, Maastricht/Rotterdam, October 2005) (hereafter ‘Maastricht Report 2005’). For a study of clothing companies and media/marketing companies in distress see Day and Taylor, ‘Financial Distress in Small Firms’, p. 107. On corporate failure see C. F. Pratten, Company Failure (Institute of Chartered Accountants in England and Wales, London, 1991); C. Campbell and B. Underdown, Corporate

Insolvency in Practice: An Analytical Approach (Chapman, London, 1991); H. D. Platt, Why Companies Fail: Strategies for Detecting, Avoiding, and Profiting from Bankruptcy

(Lexington Books, Lexington, Mass., 1985); J. Argenti, Corporate Collapse: The Causes and Symptoms (McGraw-Hill, London, 1976). Insolvency practitioners tend to put most

corpor ate failures d own to misman agement o f o ne kind or another . A 19 9 Willis survey of 200 IPs listed the top ten reasons for failure as: (1) poor management; (2)

poor management information; (3) high gearing; (4) poor financial controls; (5) high interest rates; (6) poor cash flow/cash management; (7) slow response to changing markets; (8) excessive overheads/spending; (9) lack of strategic plan; (10) poor commu-

ni cation with banks : see Cork Gully Discus sion Pa per No. 11 (London991) p. 2,. June