HIH liquidator Tony McGrath is to become chairman of a new insolvency practice following an amicable parting from KPMG. He and the head of the firm’s corporate recovery group, Colin Nicol, are taking about 140 staff with them – about 5% of KPMG’s staff in Australia.

The move has been prompted by calls from major KPMG banking clients  – especially clients affected by US regulations – to split off the insolvency and recovery business from the audit function.

KPMG Australia CEO Lindsay Maxsted says the old structure has restricted the accounting giant’s ability to compete for corporate recovery work, which is understood to be worth about $30 million in fees. “After careful consideration, KPMG Australia believes the separation responds positively to client demand and will enable partners and staff in this area to maintain the competitiveness and vibrancy of the business in the longer term.”

And it’s not as if Mr McGrath and his new team are being cast too far adrift. When McGrath Nicol & Partners start in business on July 1, they will have all KPMG’s current corporate recovery work, including HIH, Pan Pharmaceuticals and Centaur Mining, to work on.

The new firm will also sub-lease premises from KPMG, be located in the same buildings and remain “strategically aligned” to KPMG.s