Starting an ad hoc series of articles, Nitin Joshi begins by writing about what brought him, fellow partner Jeff Brenner and their team at B&C Associates to ABc, and why the fit is so good.
“I have known Antony Batty, the company’s Founder, for over 20 years, and professional rivalries aside, I knew that he and his firm of Insolvency Practitioners headquartered in Central London could be trusted, someone we could do business with. Importantly, I also knew that this is a man with a proven record in building a business. That’s important because understanding the trials and tribulations of creating something worthwhile immediately forms empathy with entrepreneurs who have travelled on a similar road, with common journeys and experiences. These are the very people we deal with when it comes to helping businesses facing financial difficulties. So, when Jeff and I decided we wanted to look for a merger, it was uppermost in our minds that we were looking for a partner with solid values and that at its core was serious on business counselling and holding hands when people are at their lowest.
In the world of insolvency, if you don’t understand the pressures that business people are under then you might as well throw in the towel, because you’re in the wrong job. ABc clearly has that understanding, as their testimonials show.
Antony and the whole firm ticked all the boxes in our quest for a merger partner. After many approaches, some from credible competitors and others that varied from the sublime to the ridiculous, we became increasingly fussy and were only interested in a perfect fit. And then it got better when we started talking to Antony.
The ABc stable has grown from strength to strength. Initially formed by Antony and Hugh Jesseman, it now employs over 40 people across 5 offices and post-merger will have seven Licensed appointment taking Insolvency Practitioners. Together they form a thriving, diverse and motivated team – we had found the right partners.”
How I got to my view that spotting the signs of financial distress early and taking positive action are essential to Turnaround and Recovery
“In the early 1980s, I unexpectedly found myself talking to the Office of Sir Kenneth Cork, a creditors committee member on one of my cases, one that achieved a certain amount of notoriety because it was then the UK’s biggest bankruptcy. Then I was a young man, raw and uninitiated in the niceties of professional life.
I did not fully appreciate the tectonic impact Sir Kenneth would have on our parochial world of Insolvency, a world crying out for codification, because until then all we had to guide us was a plethora of reported cases and a mixed bag of company and Edwardian bankruptcy laws.
Sir Kenneth was the pathfinding author of the legal insolvency framework under which we all operate. In his seminal Report of the Review Committee on Insolvency Law and Practice published in 1982, to me, the stand-out feature was not the formal insolvency procedures – because the Insolvency Act 1986 and Rules that followed the report are simple enough mechanisms – but an analysis of the underlying causes of business failure, namely trade credit and failure to keep to terms and manage cash flow.
None of this is new. Commercial practice in ancient Mesopotamia involved the laying down of standards and rules of merchant behaviour, after which we saw artisanal guilds throughout medieval Europe. A key point of guilds was sharing information about common defaulters. Today, we see remnants of this activity in livery companies, for example, in the City of London. Fast forward and you see credit agencies, democratising views of individuals and merchants using data from a myriad of sources.
Sir Kenneth’s focus on credit was personal, and his son, Sir Roger, became President of the Institute of Credit Management.
These causes of corporate failure are still not fully appreciated by the professional community, which is a pity. Most professionals are concerned with burial arrangements rather than the cause of death. Not surprisingly, they think, often wrongly, that there is no afterlife but of course as we all know, there very often is a reincarnation.
It is completely wrong to suggest, as it famously once was in a specific case, that a company that has entered into formal insolvency is corrupt from top to bottom. The vast majority have failed simply due to mismanagement.
Our society is made up of all sorts of shapes and sizes of business activity, the causes are important if we want to see a vital, energised ecosystem. This way, innovation can thrive and wealth be created.
Yes, I may be cutting off one’s nose to spite one’s face, but I don’t think so. There will always be structural insolvencies but, please, let us be helpful to ailing businesses to show them sometimes there is no success quite like failure.
Owners and directors still do not smell the coffee until it’s too late. Advice obtained at the 11th hour is better than not taking it at all. However, at this juncture when the Grim Reaper stands with his dark hooded cloak and wielding a scythe, options for the critically ill patient are usually all too few, and because treatment was not sought earlier, only the last rites are available. And that is a great shame. I have lost count of how many thousands of companies could have been restructured if only the medicine was taken earlier when full recovery was perfectly feasible instead of leaving it to when it was too late. That’s enough of the medical analogies!
So, my mantra has always been, act now, don’t wait for trade debt to harden. And don’t forget to look after your involuntary creditors, the national and local tax authorities. And when cash flow simply cannot make a dent into core or legacy debt and trading is simply only enough to catch up or pay ongoing liabilities, that’s when you need to pick up the phone and make contact with insolvency and turnaround experts.”
Why is this all relevant for us Insolvency Practitioners?
“The answer, of course, is that it isn’t. But it absolutely should be, for these reasons:
- The majority of insolvency and turnaround work involves the subject company in arrears with their suppliers and spiralling unpaid taxes. Unlike commercial businesses, our national taxation authorities, acting for us citizens of course, are absolutely on the ball when chasing unpaid tax, and they do this by levying fines and penalties. In recent years, our tax masters have joined the queue chasing money just as enthusiastically as commercial business, and as a taxpayer, I say, why not.
- On top of this, in some sectors, such as construction, directors may have given personal guarantees to support a trade account and this will pile on more pressure. In some sectors like computer distribution where I acted for 30 years, businesses trade on minuscule margins, so much so that a bad debt will domino its own corporate collapse.
For both reasons, financial problems can very quickly spiral out of control, hence the need to take advice quickly.”
So what? It comes back to the reasons why B&C Associates merged with Antony Batty & Company
“ABc is a firm which understands that most businesses operate on simple principles: buy in goods, services or expertise and sell at a profit. This should be a simple activity, but complex reasons make it otherwise, for example: loss of customers, rising fixed and variable costs, the requirement to pay suppliers on standard terms yet customers pay on extended terms thereby creating cash flow challenges. Even with a range of invoice discounting and factoring products, transitional cash flow tectonics are still often unresolved.
So, here we are at ABc. It is a place where people come for help, for people who wake up in the middle of a cold lonely night because their bed has become their office, people whose private lives are in turmoil because their business worries have migrated to the family living room and the boundary between work and home has blurred into one.
Today, ABc are called in by an eclectic mix, from accountancy practices eager for their clients to be given immediate professional advice to intermediaries of all sorts to include corporate finance boutiques, law firms who have taken their clients up to a point but now need insolvency experts. Not to forget, owners and directors making direct contact.
The only thing Antony has not done in the 27 years the ABc has been around, disappointingly, is set up a Betty’s of Harrogate-style tea shop! I’m an advocate of tea and fruitcake as a way of resolving trouble and strife. It should be on the menu at the Security Council.
In the meantime, our merged companies share the same ethos and values and we are here to help. Why? Because we are here for when it isn’t business as usual.“
