Its often said that most things in life would be
straight forward as long as they didn’t involve human being. As much as we like
to tell ourselves that we are living in a “rational” age, where we make
decisions rationally, based on things like data and logic, the truth is,
unpredictable things like emotions and obsessions come into play. In fact, the
unpredictable element doesn’t just play a role in decision making, it often plays
an exceedingly dominant role in the decision process.
This became very clear to me when I joined the
liquidations industry back in 2014. The parties in a liquidation are bound to
have an overriding emotion. The most obvious is anger. Creditors who have
extended vast sums of money to the enterprise suddenly get the news that they’re
not going to get a cent back. If it involves employees, particularly those from
the lower end of the spectrum, the overwhelming emotion is sadness and
heartbreak. These guys might have spent many hours a day on a construction project,
not been paid for months and then told they’re never going to be able to feed
their families after months of hard toil.
Whilst these are expected emotions, the most important
character that you have to deal with, particularly in the initial stages of the
liquidation, is usually the director(s) of the business. This is especially
true if the director in question is a “founder” who had built the business in
question.
The easiest characters to deal with are the ones who
are prepared for it. I had to visit an office of company that had appointed my
liquidator. Went to the site and found that the registered office was a corporate
secretarial agent. Met the man in charge, who was the local nominee, who
promptly gave us the contact details of the main director and asked us to
specify which documents we wanted and arranged for me to collect statutory
documents within a week.
This ranks as one of the more pleasant experiences
that I’ve had in the initial stages. The reason was simple, the directors in
question probably knew that saving the business was pointless and so they let
go so that they could concentrate on things that actually made them money.
Not every experience is like this. A month ago, I had
to deal with an owner of a business who kept insisting everything was fine,
when the state of his paper work wasn’t. Accounts hadn’t been done over a year
and the place was filed with unopened letters from the tax authorities chasing
him for money. Yet he persisted in hanging around to tell us that everything
was properly filed and I had to endure endless discussions with him on all
sorts of things, including hearing about his erectile issues when he knew he
was going under. Thankfully, our main communication was in Mandarin, which was done
either at a halting pace (cause my command of Mandarin is limited) or through a
reluctant interpreter and the man served excellent Chinese tea. He said many
things about cooperating with the liquidators but the level of cooperation was
such that we had to limit his access to the premises.
Annoying directors are actually not bad. The worst
cases come from founding entrepreneurs who are emotionally invested in their
business. About two years ago, I had to deal with a director who had built up a
successful business but failed to settle with a creditor. Court Order was given
to wind up the company but when we went in, he kept insisting that there was
nothing to be wound up as his business was wonderfully profitable. He would go
on long tirades about how the court process in both Singapore and Australia was
flawed and he was therefore not insolvent. Unfortunately, whatever he was
saying was simply not relevant to the matter at hand. This was probably one of
the few instances where my youth in England helped. He was a former Welsh
Fusilier medic and I went to school with sons of men in the military, so I had
a common link of sorts. Had to use that to cool him down to get vaguely
cooperative or at least non-interventionalist. He actually had to be told by a
lawyer friend of his “You don’t have a business anymore.”
I actually get it. I understand why people become
attached to their businesses. A business is never just about the money. For the
founder in particular, the business becomes and extension of themselves.
However, having a relationship with a business is like
having a relationship of any other sort. When the love is great it is the most
wonderful thing in the world. However, a relationship with a business, like
other relationships can fail. Getting emotionally attached to a business that
is insolvent makes you guilty of insolvent trading and insolvent trading is
like being told that the other party does not want to communicate with you, ignores
you on every available communication channel for over a year and instead of
leaving it alone, you proceed to call the other party’s work place and to harass
every common friend you have. It’s not going to make the other party love you
more. In fact, quite the opposite. Insolvent trading is like that, you throw
money into a hole that you will never recover.
It’s always best to accept when things fail. Clear up
the failure and then focus on making good money. When you take things
personally, the only people who benefit are lawyers and accountants who charge
while you go out of the way to sue parties that will never have the ability to
give you back what you lost and in the end your business ends up as a series of
boxes in the liquidator’s office.
When your business ends up like this – move on – you can always start again as long as you let go of the past.
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