Insolvency: the IP will see you now

Insolvency practitioners operate in a highly regulated environment and are
accustomed to the rules and guidelines about what they must do and what they
have to tell their clients. When it comes to how they communicate with their
customers, however, they are often on their own.

There is little guidance or training available about how to get technical
complexities across to company directors who may feel as if they have just been
bereaved. How is it best to explain the options open to them complete with the
associated statutory detail? How do you present information in a non-threatening
way to a bewildered business owner in a state of shock? The people who are
required to do this are not members of the “caring professions” after all, but
financial specialists, so it would not be surprising if some felt ill-equipped
for the task.

Listening to some respected and experienced insolvency practitioners, three
themes surfaced repeatedly: clarity, sensitivity and freedom from bias.

Keep it clear

Meet face-to-face and lay options on the table so that the customer is given
a chance to understand the implications of each choice and ask questions.

Provide a clear process with easy-to-follow steps. Customers often understand
little about the detailed differences between the insolvency options of, say,
liquidation versus administration until they face them. Explain everything
carefully and in plain English.

Nick O’Reilly, business recovery partner at Vantis, says: “Quite often you
are dealing with a high number of employees who are distressed yet need to be
made aware of their legal rights. We have put a process in place which ensures
that the employees are properly informed and also have a dedicated resource for
after the event to follow up with information.”

Give advice in a down-to-earth way with as much of the paperwork as possible
ready to use. You could say: “You are legally obliged to provide 14 days’
notice.” But it would be far more helpful to say: “Here’s a letter for you to
send. If you get it out by this Tuesday you will comply with the legislation.”

Be honest even if it seems harsh. Customers need firm guidance and patience
in equal measure in a situation where they may be tempted to find a quick fix.

“I never hand out a sticking plaster where a bandage is needed,” says Harrisons
partner Debi Harvey. “Some courses of action that seem attractive to the
customer are just delaying the inevitable – I will only support a solution that
will resolve their issues in the longer term.”

Sensitive situation

Be sensitive to the state of mind of the customer, listen to their concerns
and answer their questions as clearly and openly as possible. Keep your
explanations short and give your listeners time to think. Provide back-up
documents in readable English because only a certain proportion of your words in
the meeting will have sunk in.

Provide a named individual who knows their circumstances and will answer
their questions by phone after the meeting.

“There is a definite skill in presenting bad news sensitively,” says
O’Reilly. “It is important to make sure that they and their staff receive clear
and consistent messages and before the news reaches the press.”

Freedom from Bias

Explain how you work, how you are regulated and what your aims and objectives
are. Put forward all the technical options with honest opinions on their
suitability for the company, regardless of the commercial benefits to your
organisation.

Give a realistic estimate of what you believe they can achieve with your help
and be clear about the cost of your advice. If the customer is not going to be
able to pay for a full consultancy service, give them as much guidance as you
can about where to find free information.

Insolvency practitioners are unanimous in one particular area – encourage
your customers to seek advice early; that is before they have used up all their
options and sources of finance. There are many ways of rescuing a business
that’s losing money, and a reputable insolvency practitioner wants to advise on
the best solution for the business, its directors, its employees and its
creditors.

However, if the insolvency practitioners only get involved after the last
favour has been called in and there are no assets left, there is much less that
they can do.

Jane Penson of Grammar to Go trains professionals to write clear, concise
and coherent business documents.