Crunch to sink fewer firms than earlier crises

By Olesya Dmitracova

LONDON (Reuters) - Fewer companies will fail in this credit crunch than in some previous recessions as the real economy is so far holding up better and banks are willing to help their borrowers, a restructuring expert said.

David Stark, a director in reorganisation services at Deloitte DLTE.UL, said the current crisis might not be as deep as the downturns of the early 1990s in Europe and in 2003 across the world -- although it might last longer.

"As the restructuring community sees it, we don't think it will go completely mental whereas in 1993 it went very, very busy," he told the Reuters Restructuring Summit on Friday.

The changes rocking the financial industry -- which have in the past month stripped two of the biggest banks of their independence and sunk one -- have had relatively little impact on the economy, Stark said.

"Even Northern Rock didn't have that much of an effect on the real economy," he said in reference to the British mortgage lender the government bailed out earlier this year.

"There hasn't been the big wave of LBO (leveraged buyout) restructurings we were expecting to see," he said.

When Deloitte recently helped British housebuilders Barratt Developments (BDEV.L) and Taylor Wimpey (TW.L), banks were "fairly sensitive," he said.

"(They) helped them through that and helped them reset the covenants. It will be interesting to see if that gets them through the issues. It doesn't seem like there will be much credit in next six to 12 months."

Stark added that financial companies' problems would soon start to filter through to other sectors.

There is a lot of restructuring going on in the nursing home business and the next sectors most vulnerable to insolvencies are retailers, the travel sector and the car makers.

"It will be interesting (to see) what happens to retail sales coming into Christmas. Traditionally if there's going to be an insolvency that will be after Christmas."

Consumers are struggling to get loans to buy new cars, he said. "That industry has struggled for a very long time because the margins are so thin ... There can't be much flex in that for a downturn."

(Additional reporting by Laurence Fletcher; Editing by Paul Bolding)