Receiver gets best out of bad situations

MATT NIPPERT
Last updated 05:00 23/02/2014
John Fisk
Michael Bradley
INSOLVENCY ADMINISTRATION: 'It was using not just accounting skills, but management skills too, and getting the best out of a bad situation.'

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The polite but insistent John Fisk couldn't quite believe his reception when he arrived at a Kapiti Coast car yard to take over an indebted business.

He was met by a proprietor who was strangely cheery at the arrival of the man from PriceWaterhouseCoopers.

"The guy said ‘Come on in! Would you like a cup of coffee before you start?"' After three-quarters-of-an-hour of friendly offers to help and fetch documents, Fisk asked the dealer what he was playing at. "This sort of response isn't what we normally get when we're appointed receivers," he said.

"He told us that for the last three years he'd been arguing with his ex-wife as to the value of the business, because she wanted half of it. He told us he was going to take great delight in ringing to tell her that it wasn't worth anything."

This rare episode of levity came early in Fisk's career as an insolvency administrator, and it's fair to say, as his career has progressed, the comedy has become less frequent. Fisk is best known as the receiver or liquidator of many of New Zealand's biggest corporate disasters. His more than 300 liquidations and 50 receiverships over the past six years includes rotten finance companies (Strategic, Lombard, South Canterbury Finance), giant Ponzi schemes (Ross Asset Management) and exploding coal mines (Pike River Coal).

But the PriceWaterhouseCoopers partner, whose firm bills his services at $450 an hour, got into the field almost by accident. Growing up in Gisborne he entered the workforce young as his stepfather wasn't overly enamoured with mortarboards and gowns.

"He was one of those guys who came over from England and said: ‘By the time I was 16, I was out there working. So you can do the same,"' Fisk says.

Not that this stopped him upskilling. Fisk got accountancy qualifications by correspondence while simultaneously holding down a job, then worked - still in Gisborne - as a farm accountant until moving to Wellington in 1987.

It was in the capital that he found his calling when asked, on short notice, to step in as a receiver.

"I got a day's training from this guy about what he was doing - which was basically trading this sign manufacturer in Porirua - then I got stuck in," Fisk says.

The experience gave him a taste for more: "It was something that really excited me, it was challenging.

"It was using not just accounting skills, but management skills too, and getting the best out of a bad situation."

Of all the bad situations, the worst Fisk has had to deal with was his appointment to Pike River Coal.

He started his job as receiver barely a month after the explosion that claimed 29 lives and while fires still raged beneath the ground.

He says the decision to take the job was not made lightly, and the competing pressures - and intense media attention - tested him and his firm.

"We were dealing with an asset that had exploded, and the reputational risk of someone else dying while we were in charge was quite high.

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"There was a lot of uncertainty whether we would ever get this under control - there was a risk it would continue burning for years, and potentially be an environmental disaster," he says,

"There was also this clash between the commercial and legal responsibilities that we had as receivers, against families who - at that stage - had some sort of hope that the company would be able to get the mine under control and they'd be able to get some sort of closure with the men's bodies being returned."

Despite these clashes, Fisk says he and the Pike River families reached an accommodation of sorts with the shared objective of stabilising the mine.

"In a sense we were actually working together, even if you wouldn't have thought so looking from the outside."

More mundane, but equally significant, has been Fisk's involvement in cleaning up the melted-down finance company sector.

His role as coroner for several of the highest-profile casualties - who lost more than $1 billion between them - gives him some perspective on what went wrong.

Fisk relays a particularly frank insight from a company director as to how the sector operated: "He told me they could turn on and off the cash coming into the place based on the interest rate they advertised. If you wanted a bit more cash, you raised the interest rate half a per cent - as long as you didn't go over 10 per cent, because that was seen as a risky investment - and the money would come rushing in."

But where to direct this river of cash? Most was thrown at increasingly risky property developments, with all the attendant risks of illiquidity and exposure to market bubbles.

"Fundamentally they were flawed businesses in that they borrowed short and lent long. So it was always dependent on the investor base having confidence to last the distance.

"As soon as you have a crisis of confidence, even though the loans might have been described as only being six months, the reality is you were never going to get your money back in that time period."

Criticisms from investors that the drawn-out process - several finance company receiverships have been running for more than five years - is mainly benefiting only administrators is firmly disputed by Fisk.

Describing the process as "almost like a triage unit", Fisk says liquidating loan books, establishing losses, building cases for civil claims and pushing them through the courts is a long process.

"I appreciate, from an investors' point of view, they're sitting there wondering, ‘What's our money being spent on, and is it worthwhile?' We're very aware of that."

When he's not knee-deep in insolvency, or working his lower-profile role as consultant to firms wanting to avoid financial difficulty, the trim 49-year-old Fisk can often be found clad in either lycra or running shorts.

He ran the Gold Coast Marathon last year and finds his adopted hometown of Wellington to be perfect for cycling.

"It's certainly got good hills - you have to be light to get up them. When you're doing this sort of work you need something else, and for me, I love being fit," he says.

Not all of Fisk's efforts to develop interests outside work have been as successful. His two sons attended the exclusive then-private school Wanganui Collegiate, and Fisk was invited to attend a board meeting in late 2010.

He accepted the offer, seeing it as an opportunity to broaden horizons and support a institution that "really impressed" him.

But the experience quickly morphed into another insolvency job.

"At the end of the meeting there was a discussion about how much of a loss was going to be incurred that year, and what they were going to do about it. And the answer was: "We'll borrow more money."

Fisk recounts the exchange with something akin to horror: "You can't keep borrowing money to fund losses," he told the board, agreeing to become a trustee in order to dig the school out of its hole.

Fisk was a key player in convincing central government to agree to the contentious request for the school to integrate with the state sector.

Despite saying the role "was one of those jobs I didn't really need at the time", he considers the experience valuable in seeing the other side of business trouble.

"As a professional we go in and criticise boards that are making mistakes, but I'd never actually sat in a hot seat when a business was in financial difficulty and to actually deal with those sorts of problems," he says.

- Sunday Star Times

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