Yesterday, Mr Michael told the board that concerns about conflicts created by the Big Four firm’s existing work for audit and consulting clients was likely to “limit the restructuring clients we can serve and constrain our ability to maximise the growth of this business”.

Insolvency and restructuring advisers are preparing for a monumental rise in work as the COVID-19 crisis forces more companies into distress. However, the Big Four firms KPMG, PWC, Deloitte and EY, often cannot take on profitable mandates because of conflicts of interest with existing clients.

The audit sector has been facing increased pressure and scrutiny after a series of corporate scandals at firms such as BHS, Carillion, Patisserie Valerie and Thomas Cook where auditors failed to raise red flags.

In an email to partners yesterday seen by The Daily Telegraph, Mr Michael said: “The increasing number and unique complexity of multiple stakeholders in distressed and stressed situations has made the navigation of conflicts of interest ever more complex.”

He said that the difficulty of avoiding perceived conflicts “has presented increasing challenges inside a firm like ours with audit or non-audit relationships with almost every large and medium sized business across the UK. ” He added that the firm expects to see this situation intensify in the future. 

Last month, KPMG confirmed it was “exploring options” for the 450-person restructuring unit, however, the board has now decided to pursue a potential sale.

Evercore is advising on the sale process.

A KPMG UK spokesperson told Scottish Financial News: “Our industry-leading Restructuring business has an established track record of advising on some of the highest profile and most complex projects across the UK.

“However, in recent years we have seen the dynamics of the UK Insolvency and Restructuring market change. As a result, we have concluded that now is the right time to explore a potential sale of our UK Restructuring practice.”