Winding up is hard to do, especially dealing with the beautiful game

Published on Sunday 14 June 2009 19:41

THE administrators are being called in. Rarely do such seemingly prosaic words indicate such depths of despair, as well-established firms, some of them labours of love for many generations, are brought to their knees and forced to rely on the clinical rescue offered by a team of skilled business professionals.

Despite their now apparent ubiquity in the news, the professionals who actually carry out the work required when a company fails remain quietly anonymous, aside from the occasional prepared statement made in the glare of media coverage.

One such professional is Liz Mackay, a newly promoted partner in the corporate advisory and restructuring practice Zolfo Cooper, which acted as the administrator to Livingston Football Club and in the high profile failure of XL Holidays.

Dealing with ailing firms every day, she is acutely aware of the scale of the tragedy that each failed business represents. "There will be emotion attached, particularly where it's a family run business," she says.

"You have to expect that, you have to understand it and respect it. This has been somebody's life. You have to respect the fact that they have a lot – it can be personal or financial – tied into this business.

"Yes you do face hostility, but it's important to understand they will have invested an awful lot of time, money and emotion into the company."

Originally from North Uist, Ms Mackay studied law at Thames Valley University before rejecting a career as a solicitor and putting her numerical skills to use by starting with insolvency outfit Buchler Phillips. After a succession of takeovers and management buyouts, Zolfo Cooper was formed, proving, ironically, that the corporate restructuring sector is not immune to a bit of corporate restructuring itself.

But despite being a heavily regulated presence, and one not short of work the industry is, it appears, not immune to changing the way it operates.

Ms Mackay says administrators are now stepping in earlier to prevent problems, rather than waiting to clear up the mess – an echo of the shifting focus seen in legal services towards avoiding legal action rather than dealing with it when it comes.

Stressing that insolvency proceedings are considered only as a last resort, she says: "We get involved with companies at a very, very early stage and we go in and do an independent business review. The earlier that somebody can go in, the easier it is to try and find an alternative solution to insolvency. When you're getting eviction letters, generally your options are decreased significantly."

That review will generally look at a company's cashflow, historical position and projections, and provide the directors with an analysis and recommendations for action. Ms Mackay says the company's position can sometimes be improved simply by having a fresh pair of eyes cast over the situation to offer a differing perspective.

She says that the Zolfo Cooper workload has increased since the start of the recession, but is hesitant to describe it as an insolvency boom. "I wouldn't suggest it is at the levels people expect it to be," she says. "Levels have certainly increased, but not to the extent the public believe. There's a lot more review work, which shows that the intent is to deal with the problems at an earlier stage. The thing that has happened is people have seen larger names being subject to administration. Names they would never have dreamt of entering into an insolvency proceeding."

She says the procedure to be gone through in dealing with household names is identical to other, smaller businesses, but concedes that there are different considerations to be made in relation to professional football clubs, which have, in the past years, been among the most high profile of cases.

"A football club is a different business altogether," she says. "It can be run by emotion. You are dealing with fans who love their club and the thought it might close one day is very difficult for some to contemplate."

She cites her experience at Greenock Morton, which slid into administration in 2001 and was subsequently sold on to a consortium later that year.

According to Ms Mackay, the emotional investment of the supporters was key to the club's eventual survival.

"The one thing that allowed us to trade that company on in order to achieve the sale was the fans," she says. "They formed a group called Support the Ton and would raise money at weekends and evenings. They passed that money to us to run the company in order to keep it trading.

"With football clubs, that loyalty is there and that can assist us in our process. It is what kept Morton alive for the period in order to carry on trading it.

"The fans are a critical part. They are not employees, or a supplier. They are a customer to an extent but you do have to take account of their emotions because you need them coming back through the gate to pay their ticket fees every Saturday."

Is a working life spent amid firms in trouble, the threat of redundancies and millions of lost money, an upsetting one?

"It can be," she says. "You learn to deal with anger very well, because what you get is people that can't understand the position, or they have lost a significant amount of money. One difficulty is when people get emotional, and they start to get really upset and you can't promise them it will be OK. That is difficult. Is it hard? Is it cold? It's something you get used to. You have to get used to it."

Perhaps noting that she sounds incredibly pessimistic, she is quick to add: "But there is no better feeling, in an administration, if you have traded it on, when you can sell it as a going concern and can stand up in front of the employees and say the company has been sold and we have preserved all of the jobs.

"The beginning may be difficult but what you try and achieve is that end result. That brings you the satisfaction."