Credit Union Insolvencies

I’ve been looking at the number of credit unions that have gone into formal insolvency over the last ten years or so.

I did this because I simply do not believe all the hype coming from trade associations like ABCUL and some individual credit unions’ marketing departments – you see I think there are major hidden problems in the sector.

The figures  speak for themselves – there’s no let up in the number going under! To me that is a concern when there remains a massive demand for credit union services and the government are saying they’re supporting the movement.

If Abcul and credit unions were more honest about the condition of the sector, perhaps the government would provide more, much needed, support?

By the way, credit union insolvency is a very specialist field.  If you are looking for some insolvency support, my advise to you is to shop around – you see not all insolvency practitioners have any experience in thsi field (however big they may be) and choosing the wrong IP is like marrying in haste – you will repect at leisure the day you make a quick decision.  So carry out a beauty parade of insolvency practitioners – ask them about their previous experience in the sector, get them to be very specific as to how, if you choose them, they will conduct every aspect of the insolvency – make them go into detail, don’t let them take  a broad brush approach, get into the specifics.

Perhaps you should also note that unlike all other firms, I do not charge my travelling time, accommodation or other travelling costs – this could form a big part of the eventual bill.  For you it’s dead money, no value is being delievered for it. You see, it is my policy not to charge these things because my view is if I choose to accept an assignment, wherever it may be, because it’s my choice, the client should not pay for it.  I also don’t charge for attending the board meeting at which the credit union’s board are considering their options, or for preparing a formal written report on their options.  Again something to think about.

 

If you’d like some support with your credit union, call or email me.  My mobile number is 07813 102014, it’s almost always on. My email is paul@midlandsbusinessrecovery.co.uk

Here’s the list…

2015 – 4 so far

Enterprise The Business Credit Union – May 2015; Derby United Credit Union – April 2015; Haven Credit Union Limited – March 2015; Castle & Minster Credit Union – March 2015

 

2014 – 5

Lower Iveagh Credit Union Limited – November 2014; Redcar & Cleveland Money Tree & Glen Credit Union – October 2014; Ballymacarrett Credit Union – October 2014; Glenard Credit Union – June 2014; Wantsum Savers: The Isle of Thanet Credit Union Ltd – 10 February 2014

2013 – 8

South Birmingham Community Credit Union Ltd (know as CommuniSave Credit Union) – July 2013; Carleton Credit Union Limited – June 2013;  Millom & District Credit Union – May 2013;  South Warwickshire Credit Union – April 2013;  Portadown Diamond Credit Union – April 2013; Marches Credit Union – April 2013; Severn Four Credit Union – March 2013;  Cornwall & Isles of Scilly Credit Union – February 2013

2012 – 6

North Yorkshire Credit Union Limited –  November 2012; Tamworth Credit Union Limited – September 2012;  Waltonian Community Credit Union Limited – August 2012;  Pallister Credit Union Limited – May 2012;  Hull East of the River Credit Union Limited – January 2012; Handsworth Breakthrough Credit Union Limited – January 2012

2011 – 8

Gallowhill Credit Union Limited – September 2011;  Lee Bank/Highgate Credit Union Limited – July 2011; Caribbean Parents Group Credit Union Limited – June 2011; Worcestershire Credit Union Limited – June 2011;  Southend Credit Union Limited –  May 2011;  Ilfracombe & District Credit Union Limited – March 2011;  South East Birmingham Communuity Credit Union Limited – January 2011;  Havant Area Savers Credit Union Limited – January 2011

2010 – 10

South Kintyre Credit Union Limited – November 2010;  Tower View Community Credit Union Limited – November 2010;  Three Bees Credit Union Limited – October 2010;  Landsker Community Credit Union Limited – September 2010;  Elswick and Cruddas Park Credit Union Limited – August 2010;  Hackney Credit Union Limited – July 2010;  Splotlands Credit Union Limited – June 2010;  Forest of Dean Credit Union Limited – May 2010;  Edinburgh Hackney Cab Trade Credit Union Limited –  March 2010;  Redcar and District Credit Union Limited – March 2010

2009 – 6

Derby City Credit Union Limited – August 2009;  Hull Northern Credit Union Limited – August 2009;  Eastbourne Community Credit Union –  July 2009; Irvine North Credit Union –  July 2009; St Brendan’s Credit Union Limited – May 2009; South West Durham Credit Union – May 2009

2008 -6

Polmaise Community Credit Union Limited – November 2008;  Khalsa (Bradford) Credit Union Limited – October 2008;  Inner Preston Credit Union – May 2008;  Peterlee Credit Union – March 2008; Rotton Park and Winson Green Credit Union –  March 2008; Edmonton Credit Union Limited – January 2008

2007 -8

Caia Park (Wrexham) Credit Union Limited – December 2007; Streetcred Credit Union Limited – October 2007; Corby Community Credit Union Limited – July 2007;  Ferries Credit Union Limited – July 2007; Fleetwood and District Credit Union Limited – June 2007; Clydesdale Credit Union Limited – May 2007; Skelmersdale Credit Union Limited – April 2007; L27 (Liverpool) Credit Union Limited – January 2007

2006 – 6

Breightmet Credit Union Limited – December 2006; Sheldon Credit Union Limited – November 2006; St Columba’s (Bradford) Save and Credit Union Limited – October 2006; Furness Credit Union Limited – September 2006; Money Tree Credit Union Limited – August 2006; South Airdrie Credit Union Limited – April 2006

2005 – 1

Greater Pollokshaws Credit Union Limited – June 2005

2004 -5

Hackney South Credit Union Limited – November 2004; Employee Credit Union (Luton Borough Council) Limited –  September 2004; Raffles Area Credit Union Limited – July 2004; Dalston Social and Business Credit Union – January 2004; Dudley Estate (Newcastle) Credit Union – January 2004

2003 -9

Ruabon, Cefn and District Credit Union Limited – October 2003; Croydon Branch Union of Communication Workers Credit Union – October 2003; Shepherds Bush Social and Welfare Credit Union – September 2003; Leicester City Council Employees Credit Union – May 2003; Leasowe Credit Union – May 2003; Tendring Dial Credit Union – March 2003;  Guide Post and Scotland Gate Credit Union – March 2003; Fairswan Credit Union – March 2003; Cathall Community Credit Union – March 2003.

Customer deposits and insolvency

As a licensed insolvency practitioner I am often asked to advise directors who are in a very dark place – whose company is on the brink of liquidation. I guess you might be in such a place?

 

Insolvency law requires that when a company is insolvent, and even when its solvency is in doubt, its directors have a duty to place the interests of creditors above those of themselves and the shareholders. The law looks at it this way – you’ve been given the privilege of limited liability; a cost of that privilege is that you have to do the right thing at the right time for those innocent third parties you might hurt by your actions.  Pretty much common sense, but can be difficult to implement in the real world.

If you don’t place the interests of the creditors above yours or the company’s, you as a director expose yourself to being disqualified for 7-10 years, and could see you personally paying compensation for your ‘wrongdoing’.  You could even be forced into personal bankruptcy.  And in the most severe cases, where a lot of the public’s money is lost and you continue to take money long after a judge thinks you should have known you would not be able to supply the goods or services that have been paid for, you could even go to prison.

The penalties for getting it wrong are severe so it’s vital, if you normally take deposits or payment for goods or services up front, especially from the public, that you get advice from an insolvency expert.  Take that advice at the earliest possible opportunity.  And then follow it. Be aware that turning a blind eye or ignorance is no excuse, this is something you’d be a fool not to address.

When I get involved with companies in this position the first thing I have to do is explore with the directors whether they should allow the company to continue to trade at all or whether they shut simply shut up shop.  This may sound harsh to you, especially as it’s your business and you have sunk so much time, money and effort into it, but all the other questions that follow on depend on it.  If you have come to me for advice early and you have forecasts showing that things are likely to get better, the answer is often that you can allow the company to continue trading. Often though the forecasts show a worsening position or are not certain to be achieved – in either case you should think seriously about protecting customer deposits, ring-fencing them so the customer gets their money back if things don’t go to plan.

The safest way to do this is either to stop accepting deposits.  The next safest is pay them into a trust bank account and only release the cash into your company’s own account as and when the goods or service are delivered. Both of these options make an already tight cash position worse and could make your turnaround plans unworkable.   Either way you have to manage your cash position.   If you choose not to do either of these and continue to accept deposits, you need hard evidence supporting that decision. And you should continue to revise that information and monitor the decision. This is an area where you might need my help.

How important is it you take and follow professional advice?

It’s vital. You see taking customer deposits can expose you to a wrongful trading and/or a fraudulent trading action – the first civil, the second civil and criminal action.  Case law has determined that ignorance, a lack of knowledge, skill or experience, and a failure to take all possible steps to minimise deposit creditors’ losses once the company is past the point of no return is no excuse. And that’s why you need my help.

Let’s now look into a real life case … a few years ago but the principles remain true today…

Uno plc and its subsidiary World of Leather were large retailers of furniture to the public. Furniture was bought in from manufacturers after a customer order had been placed. Customers paid a deposit when they placed the order and paid the balance on delivery.

They got into financial difficulties. Their directors allowed the companies to continue to trade for four months while investigating options for restructuring the businesses. During this time they held discussions with venture capitalists and competitors, none of which were successful and the companies were placed into administration. By then, the deposit creditors were owed £26 million. Unsecured creditors would receive nothing.

The companies had continued to accept customer deposits during that four-month period. Those deposits were not placed in a separate trust account, even though the directors knew that the company was having problems. In fact during that four-month period, the company actively sought to take more cash deposits from customers as part of a strategy to increase the money in the companies to prevent them from going under. Unsuspecting customers were encouraged to pay in full for their furniture in order to qualify for a substantial discount or early delivery.

Were the directors liable to repay those deposits?   Were the directors unfit to be involved in the management of a company?

In their defence, the directors argued two things:

• While they were investigating options for restructuring there was a reasonable prospect that the companies could avoid insolvent liquidation and
• After they became aware that the company had no such prospects, they took every step to minimise potential losses to creditors.

In particular, they claimed that by continuing to accept customer deposits— in fact, increasing them—they improved the cash flows of the business in line with a viable rescue plan that, if successful, would have enabled the companies to avoid liquidation.

The directors produced evidence of their plan which was based on accurate, timely financial information. They also showed that they had taken, and acted in accordance with, appropriate professional insolvency advice throughout.   In summary, they had made informed decisions.

The court decided that the directors were not guilty of wrongful trading and should not be disqualified. The judge explained that a director is not unfit and will not disqualified merely because he knowingly allowed a company to trade and take customer deposits while insolvent.

Key to the case were the following:

1. The directors had continued access to reliable financial information as to the existing financial position and forecasts demonstrating the proposed rescue plan.
2. The directors obtained and followed full legal and professional advice in allowing the companies to continue to trade and take deposits.
3. There was a huge amount of documentation and written evidence that supported and evidenced the directors’ decisions.
4. The directors not only kept their major creditors informed of the companies’ situation, they told them of their strategy to restructure the business, and got them to buy in to the plan. The point is they were not just trusting to luck. Not every business can do this – it’s particularly difficult for a small business to do.
5. The judge said that company directors have no duty to segregate customer deposits once a company gets in financial difficulty. Continuing to pay monies into the general company account is not on its own a reason to disqualify a director, it is not irrefutable evidence of improper or dishonest conduct, a lack of probity or incompetence.
6. Based on the legal and professional advice they received, the directors formed a reasonable belief that there was a reasonable prospect of finding a satisfactory outcome for the creditors. They held this belief properly and honestly based on hard written evidence and professional advice.
7. The directors made no effort to shirk their responsibilities, no one resigned. They were just trying to work their way through a very difficult position.

The case gives some useful guidance on what you as a director need to do to avoid personal liability. The directors weren’t flying blind. No one ran away. A proper comparison was made of the effect on creditors of closing down and continuing the business. The figures justified their restructuring plan and decision to carry on accepting deposits and paying them into the companies’ normal bank accounts. The decisions were made on the basis of prudent management, accurate financial information, and legal and professional advice. A professional analysis of the situation and comprehensive reporting are vital. Evidence is key – minute all decisions, retain all the financial documents. Get independent professional advice from the right insolvency specialist.

Here are some questions for you to ask yourself:

1. Is the company insolvent or at risk of insolvency?
2. Should you continue to accept customer deposits?
3. What do you tell major creditors, if anything?
4. What steps should you take to protect your personal position?
5. Can you resign if you don’t like what is going on?
6. Do you have all the evidence you need to justify your decisions?
7. Are you taking the right professional advice?

Business Opportunities list 8 October 2014

 

Welcome to our latest business opportunities listing:

Brad Sugars’ Free seminar in Birmingham

Brad Sugars the founder of Actioncoach is coming to the UK on tour and will be at the National Motorcycle Museum in Birmingham on 21 October. To book in go to www.buyingcustomers.com and to get to attend free use the promo code FREE4ME.

Here’s what Andy Hemming of Actioncoach has to say – ‘If you’re tired of listening to people telling you they can help grow your business when THEY haven’t even grown their own business – then you must attend this event.”

Investor sought in prime Sri Lankan land (10/01)

The owners of the freehold of 3 acres of prime land, fronting the beach (450 metres of beach), in Wadduwa, about 40km South of the capital, Columbo – (unaffected by Sunamis) are seeking an investor – £300k – to part fund the building of a holiday complex.

Vixen Jetair VM36T  Cabinet Blasting machine for sale (10/02)

With 4 cartridge dust extractor, date of manufacture – 2008, commisssioning use only due to customer cancelled order, at point of sale, about £12k new, can be seen operational, for sale. Midlands located. Sensible offers invited. Immediately available.

Production Director Sought (10/03)

Staffordshire based manufacturing company seeks an experienced production director. Must be a rottweiler who takes no prisoners. Even better if he/she has money to put into the business. Immediate start preferred.

Manufacturing Companies Sought (10/04)

I have been approached by a good number of individuals, companies and groups who are looking to acquire Midlands based manufacturing / engineering / fabrication businesses. If you have one to sell, or you just want out, please let me know.

Asset Disposal (10/05)

On my tours around the Black Country I never fail to be amazed by all the cash companies are sitting on or wasting by holding on to older, surplus, or redundant machinery they never use. I am now a partner in an asset disposal business that will turn that piece of junk – at least it is to you – into cash, and in doing so free up valuable space. Just call me if you or anyone you know is in this position.

*FREE Event for Young Chartered Accountants (ICAEW)!

The Wolverhampton Society of the ICAEW is inviting young – i.e. trainee and recently qualified members – to a Young Members night at the Darts at the Civic Hall in Wolverhampton, on 13 November. Click here to book in. Alternatively, give me a call. And yes, it’s virtually free! (pay £10 for a £25 ticket and get 2 free drinks – who says you cannot get anything out of an accountant – see you there!)

How it works…

You pass this mailer around to people you know, either by email or using the social share buttons. You or they email me with any interest – paul@midlandsbusinessrecovery.co.uk. I put you in touch, you negotiate direct. If a deal gets completed I get paid an introductory fee by the other party, there’s no cost to you. These circulars are sent once, and once only – if you miss a mailer, you’ve missed the opportunity!
Paul Brindley
Licensed insolvency practitioner
Midlands Business Recovery
Tel 01902 672323

Led down the garden path…

This is the third article in my rant over the bad – in fact downright dangerous – advice my fellow insolvency practitioners are regularly giving out…

The first was about the bad advice being given to company owners, selling them a liquidation they didn’t want, need nor could easily pay for…

The second was about the failure to advise individuals that income based individual voluntary arrangements are a massive gamble…

This, my third, rant is again about the bad advice given to individuals, but on a more general level.

Let me explain…

Have you seen how debt advisers of all sorts, but particularly the IVA specialists, send husbands and wives, or couples, down the same debt solution at exactly the same time?  They argue that it makes perfect sense, that doing so is cost effective… yet that, at least for me, is manure, and I’m going to show you why…

First of all, a few key principles for you to take on board…

You, me, your kids, your parents, Uncle Tom Cobleigh and all are separate individuals in the eyes of the law.  We’re each our own entirely distinct legal entity.  It matters not that we are married, part of a family, related in any way – we are all our own separate legal being, with our own little package of assets and liabilities, and thus our own individual options for dealing with our financial problems. 

And, importantly, those options are often not mutually exclusive.   An option taken now doesn’t always stop another being taken later on.

Sure, there are a few complications when their are joint assets or joint debts, but the principle remains – we each have our own separate options, which we can take as and when we choose.

Let’s take a typical situation…. Husband (Basil) and wife (Sybil); Basil is a landscape gardener who chooses to run his little business through a limited company, in which he owns all the shares.  His normal work is maintaining your and my garden, doing a little building work from time to time, pathways, rockeries, decking, BBQs, that sort of thing.  A nice little business, but not enough to keep house and home, the family has to rely on his wife’s income too, especially as he had an accident a year or so ago – he twisted his back beating up his Morris 1100 and couldn’t work for 6 months.  Couple this with a foray into the buy to let market where a void period and some unexpected repairs as a result of the actions of a dodgy tenant and supporting one of his kids through university saw his debts built up.  He now has £50,000 in personal credit card and loan bills, each at their max, he’s now not even paying the minimum payments – the business isn’t doing as well as he’d hope as people aren’t spending like they used to on their gardens, and his bad back plays up from time to time, middle age is taking its toll.  There’s nothing but a few items of small plant and an inexpensive van in the company: it”ll generate £1,500 per month on a good month, more often than not a lot less, particularly in the winter months.  The buy to let is in negative equity – they’d taken out the maximum mortgage they could when they bought it, and have remortgaged a few times, using the money raised to buy Basil’s van and tools.  The buy to let is making a profit of £120 per month, after paying the mortgage, assuming everything goes hunky dory….

Feisty Sybil is a part time shop assistant and home maker.  When the debts started piling up she took on a few debts too – but at a far lower level, after all, she earns a lot less than Basil.  She’s got £20,000 of credit card debt, of which £15,000 is in her own name, £5,000 is a joint debt with Basil.

The family, Basil, Sybil and their three kids – Martha, 20, going through Wolverhampton Uni; Steve 16 and at Bilston Academy; and Sarah, 13 at Coseley School – all live in a cramped three bed semi on the Coseley/Bilston border.  A few years back, with the walls moving in, Basil, a dab hand at building, started on an extension above the garage.  But then he hurt his back, he couldn’t work and now he hasn’t got the money to finish it and doesn’t know when he will ever have.  The house is virtually unsaleable in its present condition, at best a buyer would pay a knock down price, leaving nothing in the kitty to set up home elsewhere after settling the mortgage.  Basil is hoping Sybil’s mother, Ethel, will leave them something in her will, but they’d be lucky to get £45,000 when she turns her toes up.  And that’s assuming it doesn’t all go in care home fees.  He/they have been holding on for that legacy – it might just provide the lifeline they so desperately need – but cantakerous old Ethel, whos’ yoyo’ed in and out of hospital over the last 18 months, seems to have 9 lives.

So you’ve got the picture – The Fawltys are a hard working, average, working class family who are trying to work their way through life, but have been hurt by a few things that all came together to put them into quite a difficult position.

So they go to see an insolvency practitioner.

This ‘expert’ recommends an IVA – a ‘joint IVA’ – the great thing is they’ll be able to substitute the need to pay the minimum payments on their debts with ‘one affordable payment’ of just £400 per month into the IVA – it will mean paying less and bring some certainty to the situation, they’ll be able to slep at night.  They’ll even keep their home; Basil will still be able to act as a director of his little limited company; they could keep the buy to let; and in 5 years time, they’ll be debt free – what they’ve not paid to their £65k of unsecured debt will simply be written off.  What’s more, them both going into an IVA right now would not only keep the IVA experts’ costs down, it would make things far simpler for them as they’d both come out of it at the same time, ten years before retirement.

Sounds reasonable?  Sure it does… but as I said, it’s appalling advice.

Let me tell you what taking that advice would lead to…Ethel’s legacy going into the IVA to pay the insolvency practitioner’s fees and Basil and Sybil’s creditors – that’s to say, the Fawlty family would see nothing of it; Basil and Sybil still having to pay £400 per month into the IVA for 5 years – these monies also going to the creditors to pay off the ‘capital sum’ and interest (with interest being charged at 20% to 30% pa); the IP getting about £20k in fees in total; etc… there are other implications too.  All in all a poor deal for the family.

So let’s pull the advice to bits…

The following is a key principle – please remember it…  ‘Just because one solution might be the best option right now for one person, doesn’t mean to say the other has to follow the same course at this exact point in time, even if ultimately it might be the best option for them too.’

Here’s another – both Basil and Sybil have their own full tool box of options each – these include (i) Best manage their cash, keeping themselves out of any formal insolvency; (ii) Keeping creditors at bay using the ‘token/no payment’ option; (iii) Debt Management Plan; (iv) IVA; and (v) Bankruptcy.

It’s vital they should assess their own individual options first, asking themselves ‘What’s the best for me at this particular point in time?’.  Then when they know what that option is, assess what that means for the other member of the couple.

So the steps are:

1)  What’s the best option for me?  Write down the pros and the cons for me.

2) If I take that option, what impact does that have on my partner?  Write down the pros and the cons for them.

3)  Are we prepared to live with the cons?  Could those cons be reduced, if not eliminated, by something either I or my partner could do?  If I’m not happy with the cons, and neither I nor my partner could reduce them, what’s my second best option and what are its pros and cons – the cons on both me and my partner?

4) Repeat steps 1) to 3) for your partner, assessing the pros and cons on both them and you.

5)  Put together a plan that you’re both ‘happy’ with.  Ask yourself, whether overall, this plan works and fits with what you both want to achieve.

6) Run with it…

Here’s what I would have advised in Basil and Sybil’s case…as you’ll see it’s a country mile away from what the other IP advised…

Basil should go into bankruptcy soon, and first – cost of doing so £700, debts written off £50,000 – it would be like picking a 70 to 1 certain  winner at Epsom, a great return on his money; he’d come out of bankruptcy in 12 months time. Sybil should keep her creditors at bay for that 12 months, using the token payment option; before Basil goes bankrupt, Sybil should become the shareholder and director of the company, taking responsibility for running it, with Basil becoming a mere paid employee – for just 12 months.  Then when he’s out of bankruptcty the roles would reverse – she’d go bankrupt, but before she did so, he’d take buy back her shares in the company and get appointed as its director.  Cost to her, £700, debts written off £20,000. Get Ethel to change her will, so the beneficiaries are Martha, Steve and Sarah, missing out the Basil/Sybil generation (she could always change it back in 24 months time if she’s still around!) – that way the legacy would not fall into the bankruptcy as ‘after acquired property’, it could be used to pay down the mortgage on their home or the BTL giving them a far better chance of a prosperous retirement.

An alternative to think about in 12 months time would be, if Ethel dies in the meantime and leaves her £45k to the kids, for some of that to be used, say 40%, £8k, to offer to her creditors in full and final settlement, if she really wanted to avoid bankruptcy.  The point is, she doesn’t necessarily have to follow Basil’s route – having ringfenced the legacy, she could take another solution then.  Watch, wait and see!

Result if plan A, of them both going bankrupt, him first, her later: No disruption to the business; total process 24 months when one or the other was in bankruptcy compared to 5+ years in an IVA; no assets lost – not even the home or BTL (unless they actually wanted to lose the BTL – they have the choice);  legacy kept within the family, doing it, rather than the creditors some good; no IP fees, whole process cost £1,400 (plus the cost of my advice), a little inconvenience and form filling, and the cost of writing one/two wills, compared to an IVA which would see over £69,000 spent, I’d argue wasted.

The Fawltys’ name may be made up but the facts are real,but in recent weeks I’ve seen 2 families, both where they’d been led down the garden path by so called experts with plausible yet downright dangerous advice, costing them money they couldn’t really afford.  You see, they suffered the outcome I ‘anticipated’ above, they will probably now never manage to rebuild their lives.

And that is inexcusable.  The IPs took them to the cleaners, their entire family, not just the ones in debt, but them all.

You see nothing will ever be a substitute for experience, professionalism and a single minded focus on getting the best outcome for the client … and with almost 30 years in the insolvency game, you can be sure anyone who comes to me for support will be getting these in abundance.  They will not be sailing into unchartered territory, they’ll get advice and support that will stand the test of time.

If you’re accustomed to using another insolvency practitioner and the story I’ve painted above is ringing true for you, I’ve a question for you…why?

What we can all learn from the mountains about fear …

Hi, this month I’m going to talk to you about something we all experience from time to time – and that’s fear.

We all feel fear from time to time, and right now, although there is more of a feelgood factor around, I am seeing people who are fearful of making key decisions whether they be ‘positive’ – growing their business or exiting – or less so, such as seeking a formal insolvency solution.  Fear can paralyse.  It can cause people to settle for a lesser outcome than they’re capable of.  Fear holds us all back, it’s just a question of how much we allow it and where.

I’m going to tell you a few personal stories about when I was afraid, indeed in fear of my life in the mountains, drawing on the circumstances, my thoughts, my and others’ actions – you see the principles that apply in the mountains also apply in business!

Firstly, let’s set the scene … I’m a member of a mountaineering club, a small team of us within it are ‘ticking off’ the highest mountains across Europe… and doing so has got us into a few scrapes.  Here are just three of them…

Let me take you back to my first European trip, all those years ago…

Here’s me part way up Gran Paradiso, Italy’s highest mountain.

Taking a break, high above the clouds, I was feeling good – I’d already put a lot of effort in, I was enjoying myself.  Sure, I wasn’t exactly in my comfort zone and had no idea what the next few hours would bring, but all was good, I was feeling strong and moderately confident.

Over the next few hours as we climbed higher, more of my colleagues fell by the wayside – the combination of intense heat, effort and reducing oxygen levels was taking its toll.  20 steps before stopping gasping for breath and waiting for the pain in my legs to subside became 15, then 10, then 5.  The slow plod up the snowfield then became more technically challenging, the penalty for a stumble more serious – if I hadn’t been roped up to an experienced climber who’d been along a similar, even though not the same route, before, I wouldn’t have got this far, I couldn’t have gone on.  But I was, and could.

Eventually we got to the top.  Euphoria!  Staying there for half an hour we drank in the views.

How many countries, how many mountains could we see?  Then it dawned on us, the snow and ice was melting in the afternoon sun… descending is always far more difficult and dangerous, and can be slower, than ascending…  even more so as the snow and ice softened.   It seems as suddenly things had got far more serious.  Our plan needed to be bold… our actions decisive… we had to implicitly trust each other and our equipment.

This was the plan…  I’d belay the climber down the ridge until where he could safely belay me, then  we’d swop; if there was no safe belay stance, we’d both walk carefully down the ridge, as close to the top edge as we could so that if one of us fell down the steep snow slope (this seemed more likely), the other would instantly throw himself over the cliff (3,000 foot drop) the other side to counterbalance the fall.  A fall or slip not stopped by the other climber would mean certain death for both of us.

God I was scared… I’d been afraid on the way up but this was altogether another level … and I was uncomfortable having to place my trust in one person for so much…I’d not had the opportunity to train with him before, there’d been no dry run.

4 hours later we arrived down safely at the hut, exhilarated, a real thank God moment .

Then there was Liechstenstein…Grauspitz

In the restaurant at the top of the cable car, we took ten minutes out in for a coke, today was going to be a long day…  today’s objective was a simple climb up a mere 2,500 metre peak before crossing the ridge to the hut.  You see we were following a route set out in the trusted Cicerone guidebook.

I guess we should have listened to the restaurant owner, he’d been to the top 200 or so times.  But we were taking a different route – one he said didn’t exist.  Surely, we can trust the guidebook?  ‘Which hut?’ he asked?  ‘In one day? – that’s impossible’.  Maybe we should have listened.

We started on our way…the scenery was stunning, it was Spring in the valleys, the flowers were incredible, the lakes a magical colour, the views across to the high mountains stupendous.   So this is where the Swiss army do their mortar practice?  They weren’t firing today so we carefully picked our way up the firing range, avoiding the UXBs stuck in the mud, posing for photos with the remnants of those that had gone off.

A check on the GPS, yes, this is the climb, time to rope up…there were no telltale signs of climbers having been here before, but checking the guidebook, this looked like the route.  Anyway we’d be ok, we’d been training for months, we had done this before.

50, 100, 150 metres up the climb … things were getting progressively more difficult.  And there was no way of retreating – there were no safe anchor points off which we could abseil.  We had just one option, to keep climbing…


This is a photo of me at one of the advanced belay stances.  The look on my face says it all.  A few minutes before this was taken a rock the size of a fridge had come down, dislodged by my climbing partner, missing my head by inches.  I’d never seen it, my colleagues yards from me had.  There had been no warning shout, it had happened so quickly.  This was serious: I had just one piece of gear attaching me to the rock – the norm is 3 – and it was poor, it wouldn’t hold  a fall; the rope to my partner then ran out, he hadn’t moved for several minutes, he’d dislodged a ruck of rocks, it was obvious he was stuck; and on the way to where he was now stuck he’d been complaining he couldn’t get any gear in. There was a good chance he’d fall from 30 metres + above and straight past me – unless I could somehow jump on him as he went past.  We’d probably both fall straight to the bottom – 400 ft or so.  Look at the concentration on my face! – I was listening what was happening above, feeling, reading the rope, hoping to make the right decision in a split second should my partner fall – what was happening on the climb next to me was ignored, we had our problems, they had theirs, we couldn’t help them right now, 100% focus on the here and now.

A shout came down ‘ I need you to leave your stance, start climbing with me, I’m ten metres from a ledge, I might be able to make it’.  Leaving such an uncomfortable, unsafe place wasn’t too hard a decision, yet it still meant making a gigantic leap of faith… sure it might not work, but what was the alternative?  And it meant climbing at a grade above my normal lead climber capabilities, up a collapsing route, essentially with us both operating at the very limit of what we can do for a short while.

A few hours later, exhausted we go to the top of ‘the climb’.  We’d made it… or so we thought.  A plod up a rubble field led us to a col ….

The summit was a mere hour’s round trip to the left, the hut a very long way down, you can just see it left of the mountain.  As it was early evening we took the difficult decision of abandoning the summit attempt despite traveling all that way just to bag it!  Our plan of crossing the ridge was also abandoned – it wasn’t a ridge as the maps had suggested, it was another immense climb – our plan, based on books and maps, was unachievable – foreign maps are so unreliable!

Contour around, pick up the path, it’ll be easy, won’t it?  8 hours later, 2am at night, in the pitch black, exhausted physically and mentally, we collapsed into the hut – having improvised on our crossing of 2 precipitous snowfields (we’d abandoned our snow and ice gear in the car as we’d been told there was no snow up there); done several via ferrata in the dark, above huge drops …etc.  We’d been the first to cross from the col this year. Although hardy mountaineers this relatively small one had pushed us to our limit, and beyond, time and time again.   We’d given it our best shot, but we’d failed… but we were alive, no one had died – our pride was dented.

Then there was Germany…Glossglockner

Getting up any 4,000 metre peak is hard work, they don’t give in easily.  A long walk up the valley, across the glacier, up a scramble led us to the hut at around 3,500 metres.  I was really struggling – the speedy climb to such a height meant I had ‘mild’ altitude sickness. I couldn’t eat, I had a raging headache, I ached all over, I was shivering uncontrollably, my breathing was shallow and very rapid.  I doubted whether I’d be able to get up in the morning, let alone have a crack at the mountain.

After a night of no sleep, things hadn’t really improved, yet forcing some breakfast down, and with some encouragement from my fellow climbers, I decided to give it a go as I’d come that far.  The problem was Andy, our most experienced guy, suggested that I should lead the team!  I hadn’t lead climbed a 4,000 metre peak before.  And I was feeling terrible. My pride meant I simply had to give it a go – the nickname ‘bunk-bed’ given to one of my climbing friends who had had similar altitude issues but stopped in the hut on a previous trip had stuck with him!

Slowly I started off, zig-zagging up a snow bank that steepened until eventually the snow gave a way to a scramble, time to ditch the snow gear.   I still felt terrible.  Huge drop to the left – memo to self – be aware of it but don’t let it detract from my focus – always keep three limbs on the rock; plan half a dozen moves ahead; find and stick to a rhythm; test each move before committing to one that might be fatal; look out for and use what protection you can when it’s there, but if there’s none, trust yourself; small moves, no big ones; stop and re-appraise strategy when you can; expect a crux – don’t worry about it until you get there, and then just deal with it; control the emotions; trust in your team but keep watching them to monitor their performance; expect someone, in this case the foreign guides, who somehow think you’re inhabiting their space to try to walk all over you.


This is a photo of the ridge, that I led us up to, across and back down…with pride, with increasing confidence and adrenalin overcoming my physical difficulties and mental uncertainty.

So what comparisons can we draw to being in business, especially one that is struggling?

  • Being in a comfortable place is only temporary.  Make the most of it because it’s not the norm – the norm is being out of the comfort zone, continually stretching yourself.  
  • It’s ok to aim high and miss, because even then you’re still achieving far more than almost everyone else!
  • If pushed, you’d be surprised what a normal person can achieve…especially if they’re supported, even tacitly, by an expert who’s got real, practical, experience along a similar route. 
  • It’s important to have the right equipment / tools around you.  It’s vital you have the right team around you.  You may be able to improvise on the equipment/tools, but don’t ever consider compromising on the team.
  • After someone has got used to operating outside of their comfort zone, decisions and actions that were once considered to be impossible become easier.   And that breeds self-confidence.
  • Sometimes you just have to grit your teeth and get on with it, however hard it becomes.
  • Desperation is not always a bad thing, even if it did feel like the worst thing in the world at the time. 
  • Pride can either get in the way of achieving something major or drive you on to do it – it’s neither entirely a good nor bad thing, but it’s important to know how it’s effecting your decisions and assess whether you should allow it to, or not.
  • There must be an end game and a plan, but neither should be set in stone – it’s a good idea to adapt both of them as you go along to reflect changing circumstances.
  • You can never stop working on your skills – it’s not enough to just rely on the experts.  Everything that’s worthwhile achieving involves a good degree of self-help. 
  • What’s going on inside a person’s head is key – your own self belief and a willingness to take calculated risks are vital when the chips are down.  To others, even you at an earlier moment in time, this may seem reckless, but it’s not.  Having overcome any sort of challenge in your life, even in completely unconnected areas, can be a help to taking tough decisions now.  
  • Sometimes to survive it’s essential to focus on one thing at a time, ignoring everything else that is going on around you.  The ability to blank out things you cannot influence and are irrelevant right at that moment in time is important.   
  • 99.9% of the time there’s no need for you to take big steps – there are only small steps strung together to make one big step.  Looking no further than the current step can be a good thing.
  • Things take longer than you’d anticipate.  Everything… always.  
  • It’s ok to be scared, even out of your wits, and to lack confidence.  But it’s vital to harness your fear, to control your emotions, to maintain your cool, to dampen down any uncertainty even if things are going against you – doing so will sharpen your awareness, up your game if only to enable you to live for another day.  In business what’s the worst that can happen? – after all, you can rebuild!

As an insolvency practitioner, I have to deal with stressful situations similar to those I’ve encountered in the mountains, every day.  I believe that these experiences help give me the right balance, help me best support the clients I work with.  Sure, not everyone wants to go on such a journey, but that’s ok, because plenty do, and for them the world is their oyster.

Paul Brindley
Midlands Business Recovery