Analysis – Receivership – just the ticket

Administrators, liquidators, receivers, call them what you will, but in the eyes of the public and of particular workers, they conjure up images of the corporate grim reaper.

These words are traditionally associated with redundancies, bankruptcy and ultimately financial ruin for a company and often its employees.

For Alan Bloom, head of insolvency at Ernst & Young and currently the UK’s most feted administrator, the picture is quite different. ‘We feel we’re the good guys,’ he says. ‘We’re not responsible for problems that arise before we step in. And we’re not in any way associated with the events of the past.’

‘We tend not to dwell on the past. We’re there to sort out what we’ve inherited,’ he adds assertively.

And perhaps his most recent job as the man the government brought in to restructure Railtrack, the UK’s debt-ridden rail company, could go a long way to changing the image of insolvency professionals.

To date, Bloom and his team have managed to avoid the slippery slope of redundancies. A prospect not ruled out by most observers.

‘The first week was all about stabilisation. It was helped by the fact we were able to say there would be no redundancies,’ he explains. He also puts this down to the co-operation received from the board and employees.

Was he daunted by the huge task of saving a company that officials had predicted would experience a shortfall of #700m by December? ‘There’s always an element of trepidation. But you never get hardened to a situation,’ says Bloom.

His years of experience must not be overlooked – though there were still some surprises.

‘The initial problem had been that we had no access to the company or its employees. And things are often very different when you get up close.

‘However, we were pleasantly surprised that our estimates were broadly right. Things we expected to find we found,’ Bloom explains with a hint of relief.

He is very much upbeat about the company’s future. Although he is giving nothing away, he sounds certain this job will turn out to be another success for him and his team.

Bloom was the administrator of the Olympia & York Canary Wharf project for 18 months. He was successful in turning the ailing company around and bringing it back to a solvent state.

‘At the time it was one of the most successful (administrations),’ he enthuses.

But the end product of Railtrack, or the ‘son of Railtrack’ as it has been dubbed, might not turn out to be quite what the government desires – a not-for-profit company.

Nevertheless it is full steam ahead at E&Y.

Since the company’s ‘stabilisation’ Bloom and his 40-strong team have been concentrating on their duties of transfer. They started the process of getting investment, strategic and consultancy advice last week and after seeking legal advice Bloom was told that under the terms of the Railways Act E&Y must be proactive in seeking offers.

But no announcements are expected to be made until early next year.

Railtrack could not have come at a better time for Bloom who resigned in September as Barings’ liquidator in a hail of fire from a major group of disgruntled Barings bond holders.

After five years working on the complex case, Bloom said it was ‘the right thing for us to resign at that moment’. He is however very proud of the job his team did and does not think that the strategy adopted by E&Y has changed at all under Barings’ new liquidators, KPMG.

Bloom has been working in the corporate restructuring sector since 1978.

He got a taste for insolvency when he had the opportunity to work on a few projects in the early 1970s during a ‘small recession’. He found it more interesting than other options like audit.

What he loves about the job is its unpredictability, but he points out a downside – long hours.

The skills he deems crucial to the job are the ability to work with multi-disciplinary teams and the nose of an investigator. ‘You must be able to be calm in a crisis. You have to be able to see the wood for the trees and understand that not everything you see is as it seems,’ he says.

Despite his unstinting energy and enthusiasm for the job, he has a few harsh words to say about UK management.

‘Management tend to bury their heads in the sand. They are still in a state of denial. I also think that often management put things off. But the longer you leave it the worse it gets and the fewer options there are (for restructuring),’ he says.

But, maybe he should consider that without directors burying their heads in the sand he could be out of a job.

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