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Insolvency expert becomes second in NZ to be inducted into global organisation
Kiwi insolvency expert Bryan Williams has become just the second person in New Zealand and one of 200 people worldwide to be named a Fellow of global insolvency organisation Insol International.
And as the global economy looks set to head into a recession and more businesses fail, the founder and managing director of BWA Insolvency believes his new accreditation could be of value to several New Zealand companies.
Auckland-based insolvency expert Williams has spent more than 29 years helping resuscitate failing businesses or wind-up businesses that are unsalvageable. He embarked on Insol’s six-month post-graduate Global Insolvency Practice Course – all done remotely due to Covid restrictions and led by tutors and instructors who are regarded as academic giants in their field – to gain an understanding of the legal issues involved in businesses that operate across borders and what happens when those businesses fail.
Insol is the international association of restructuring, insolvency and bankruptcy professionals and comprises 10,500 practitioners worldwide.
“It was an enormous amount of work, it was quite intensive and it is a very complex subject, but it was worth it, because I learned so much,” he says.
Williams says Covid-related financial stimulus packages have kept the world’s economies going over the past few years – and, in his view, they have also kept alive a number of companies that would normally have died. But there are powerful predictions that the world is about to enter a recession and if that occurs, we are likely to see a return to the normal level of business failures.
“As famed investor Warren Buffett said, only when the tide goes out do you discover who’s been swimming naked. And the tide has no respect for where its owners reside, so the reality is that there are going to be consequences that will flow across borders,” Williams adds.
Through this course, Williams says he can now provide local advice to directors of New Zealand businesses on their overseas interests, as well as provide advice on how they may be affected by an offshore insolvency.
While 79% of New Zealand’s businesses have fewer than five employees, he says many companies now have dealings outside of New Zealand.
“The companies of today deal internationally. Many own subsidiaries offshore or they themselves are a subsidiary of an offshore business. They may also have relationships with manufacturers, distributors or retailers. When a party becomes insolvent, tension arises around the competing rights in different jurisdictions – France, for example, has a strong leaning to the rights of employees, whereas many South American jurisdictions lean towards the rights of secured creditors.”
Often, he says, the reality of an international insolvency is that “it’s all about the value of property and where that property exists”.
“The property can be tangible or intangible. It can be corporate value in Brazil or inventory that is in the bulkhead of a shipping vessel that has been stopped in the Suez Canal.”
Even countries as legally compatible as New Zealand and Australia will have differences that need to be worked through, he says, but it’s exponentially more complex for a New Zealand-based company that is, for example, trading in many of the 27 states of the European Economic Community.
“Each of them will have their own law that they consider should be respected and adhered to,” he says. “All these issues collide at the border and it’s our job to find a resolution to the competing interests.”
Williams says not all businesses can be saved and new businesses being born and old businesses dying is a natural part of capitalism – a process known as creative destruction. But there is broad recognition that business failure has significant social consequences, both for owners and creditors, so “wherever possible those consequences should be avoided”.
Williams says insolvency law, involving business reconstruction, is relatively immature in New Zealand. Legislation that allowed for the rehabilitation of companies – otherwise known as Voluntary Administration – only came into force in 2007. Australia enacted similar legislation in 1993.
“We’re only in our mid-teens, really. Up to that time, the only law that administered business failure was liquidations. This was a terminal diagnosis and it was all about the need to deal with those assets before the company was buried. The law did not pay any attention to the business that the company owned – just the owner.”
As more companies here and around the world struggle due to snarled up supply chains, rising material and energy costs, a tight labour market and falling consumer confidence, Williams stands ready to try to save them – and, when required, to put his detailed international knowledge gained as a Fellow of Insol to good use.
Bryan Williams of BWA Insolvency is a Registered Insolvency Practitioner and insolvency expert specialising in Voluntary Administration. Interested in understanding how Voluntary Administration works? Get in touch today.
This article also appeared online in Scoop Business News.