Latest / Best of Business / Damien Grant: Waterstone Insolvency Principal on the sharp rise in the number of insolvency

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Damien Grant: Waterstone Insolvency Principal on the sharp rise in the number of insolvency · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks EDB. Follow
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  Speaker 1: this and our wide range of podcasts now on iHeartRadio.
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  Speaker 2: Liquidation and receivership numbers have been trending upwards since the pandemic.
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  Speaker 2: Business liquidations at a ten year high last year, with
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  Speaker 2: twenty five hundred companies folding. It was the highest annual
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  Speaker 2: figure since twenty fourteen, with retail and constructions suffering the most.
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  Speaker 2: This year is looking to be even worse than that.
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  Speaker 2: Waterstone Insolvency principal Damien Grant joins me, now, very good
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  Speaker 2: morning to you.
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  Speaker 3: Good morning, a lovely morning.
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  Speaker 2: You're an Oakland, It is a lovely morning. Is that
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  Speaker 2: going to help? Is that going to get businesses that
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  Speaker 2: are shaky through? Or is that is that just pie
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  Speaker 2: in the sky.
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  Speaker 4: I don't know what's going to help business gets the
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  Speaker 4: businesses get through a lot of businesses are subject to
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  Speaker 4: the economic winds. With dress out of our control, and
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  Speaker 4: likewise my own insolvency firm, I am subject to economic
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  Speaker 4: forces beyond my control. When insulvances goes up, I get busy.
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  Speaker 4: If you're running a restaurant, there are so many things
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  Speaker 4: that can make your restaurant go up or down. That
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  Speaker 4: certainly the general economic tightening, we're seeing flat economic growth,
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  Speaker 4: population increases. We are getting poorer and have been for
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  Speaker 4: some time, which means disposable income and things. Our hospitality
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  Speaker 4: is dropping, which is why you see a lot of
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  Speaker 4: pain in the hospitality sector.
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  Speaker 2: It's interesting because if you are good at what you
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  Speaker 2: do and you have loyal staff and you've got good customers,
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  Speaker 2: that should be a recipe for success. But it's not enough.
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  Speaker 3: Well, if what you are really good at is making
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  Speaker 3: wagon wheels for horse and buggies, then it doesn't matter
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  Speaker 3: how good you are, does it because the market has
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  Speaker 3: moved on. So if you're really good at encoding in dos,
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  Speaker 3: well doesn't matter. You know, are there are more dots
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  Speaker 3: coders and there are people who need that.
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  Speaker 4: So no, it's it's not enough. And sometimes luck features
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  Speaker 4: a lot in business. You can see some real idiots
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  Speaker 4: doing extremely well because they capture the mood. But that
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  Speaker 4: but that's that is a nature of commis and the
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  Speaker 4: way we structure our economic system as we design it
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  Speaker 4: so that.
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  Speaker 3: A hundred people will try, ten people will do really well,
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  Speaker 3: ad people will do okay, and ten people will fail.
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  Speaker 3: And we need to not stigmatize those ten people who fail,
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  Speaker 3: because the way we design our system, the way we
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  Speaker 3: set up limited liability companies, we do it in anticipation
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  Speaker 3: that some people will will fail. Failure is not a
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  Speaker 3: it's not a bug. It's an embedded part of the system.
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  Speaker 3: And so if your business comes un stuck, it doesn't
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  Speaker 3: mean that you you're you're you are bad at business.
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  Speaker 3: It just means that, for whatever reason, the economic tide
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  Speaker 3: has moved, don't you. But I'll tell you this, A
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  Speaker 3: lot of the people who I see who fail one year,
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  Speaker 3: four or five years down the truck, they are succeeding
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  Speaker 3: in business. You learn a lot more on the way
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  Speaker 3: down than you do on the way out.
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  Speaker 2: Well, that is what I was going to do. I'll
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  Speaker 2: never forget. Adriana were saying, yes, as well, we need
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  Speaker 2: a recession to you know, call this market and you know,
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  Speaker 2: glibally saying it at which you can do when you're
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  Speaker 2: a public servant and you're getting very well paid. But
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  Speaker 2: you know, for every recession and every oh, well, this
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  Speaker 2: is going to get rid of the dead wood. They're people,
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  Speaker 2: they're real life people who who are really suffering as
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  Speaker 2: they try and hang on.
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  Speaker 3: Yes, that that is true in their respective Adrian or
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  Speaker 3: his economic recklessness created a lot of companies that should
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  Speaker 3: not have existed, which then subsequently failed.
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  Speaker 4: The man was a catastrophe. I'm only disappointed society to
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  Speaker 4: see Michael Raddell, not me. I thought I was much
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  Speaker 4: more critical of him. The Michael was so Adrian. If
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  Speaker 4: you want to have a go, you know, feel free
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  Speaker 4: to see. Yeah, bring it on.
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  Speaker 3: He's a reckless economic and competent and he could barely
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  Speaker 3: fit into a tie. I have no respect for the man,
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  Speaker 3: but I just want to come back to that point though,
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  Speaker 3: that when you go into business, you go into business
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  Speaker 3: knowing that things could fail, but also in anticipposing that
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  Speaker 3: things could work. And so there is yes, people, when
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  Speaker 3: businesses fail, it gets hard. But also don't forget that
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  Speaker 3: the way we structure things, bankruptcy in particular is the
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  Speaker 3: worst thing that can happen to you, And bankruptcy in
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  Speaker 3: New Zealand is not that catastrophic. And the state tender
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  Speaker 3: around and says, all right, mister Grant, you've had to
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  Speaker 3: go on business.
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  Speaker 4: And you've failed. We will now protect you from your creditors.
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  Speaker 4: You take three years off, you go get a job
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  Speaker 4: and then in three years you can go again. The
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  Speaker 4: system is designed so that people can fail and fail
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  Speaker 4: in an orderly way that allows them to reassemble their lives.
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  Speaker 4: And for a lot of people, business is hard, and
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  Speaker 4: a lot of times the best thing that can happen
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  Speaker 4: for somebody whose business is not succeeding is to close
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  Speaker 4: it down. One of the analogies I like to think about,
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  Speaker 4: and this is this is really a problem for men.
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  Speaker 3: If you ask a guy what does he do?
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  Speaker 4: I will say I'm a liquidator, I'm a broadcaster, I'm
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  Speaker 4: a lawyer. It's a bit sexist to say it. But
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  Speaker 4: if you ask a woman, they will often say, ah,
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  Speaker 4: you know, I work for Adia in New Zealand.
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  Speaker 3: I work at all Orten. Women are much more rounded
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  Speaker 3: and rational individuals, and they have a sense of themselves. Men,
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  Speaker 3: because we have no soul, We are completely shallow individuals,
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  Speaker 3: and we completely identify with our jobs. And so when
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  Speaker 3: a when a guy who business is in trouble, we
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  Speaker 3: are too stubborn and too stupid to come to the
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  Speaker 3: realization that it needs to stop. And that psychologically for
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  Speaker 3: a guy is so very difficult, because if your identity
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  Speaker 3: is wrapped into your business. There's not always true that
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  Speaker 3: a woman who find themselves in the same situation. But
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  Speaker 3: if your identity, your sense of worth is locked into
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  Speaker 3: your business and the business fails, you don't just lose
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  Speaker 3: your income, you lose a part of your identity, which
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  Speaker 3: can be unbelievably. It's not just the economics that's harmful.
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  Speaker 3: It's how people see themselves, which can.
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  Speaker 2: Be difficult, absolutely, but if they can gain a sense
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  Speaker 2: of perspective. I mean, it's not good for you to
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  Speaker 2: be waking at three in the morning with your heart
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  Speaker 2: pounding and your mouth dry and feeling sick to your core,
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  Speaker 2: wondering what the hell you're going to do, because everything
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  Speaker 2: you can do you're doing, but it's beyond your control.
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  Speaker 2: I just wondered, is there a set but it sounds
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  Speaker 2: like you've already answered it. Is there a sense of
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  Speaker 2: release once you realize that you cannot that's not your fault,
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  Speaker 2: you can't keep hanging on, and that you're better off
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  Speaker 2: to your family alive and working for somebody else than
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  Speaker 2: running yourself into the ground trying to say that business.
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  Speaker 3: That is true, and I certainly see the visceral relief.
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  Speaker 4: On business owners when they finally say that's that I'm
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  Speaker 4: going to close the ball, close the business. A lot
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  Speaker 4: of times closing the business doesn't end it because people
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  Speaker 4: have given personal guarantees, the landlords and so forth, and
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  Speaker 4: so sometimes the business failure can then be followed up
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  Speaker 4: with bankruptcy. But as long as you've got your affairs sorted,
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  Speaker 4: your house and a trust and so forth, it's not
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  Speaker 4: quite so catastrophic. But I just want to come back
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  Speaker 4: to that person at three o'clock in the morning thinking.
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  Speaker 3: Hey, you pay your wages.
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  Speaker 4: I suffer from that. I will sometimes wake up at
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  Speaker 4: three o'clock in the morning and thinking, oh my god,
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  Speaker 4: how am I going to manage this this delegation I've
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  Speaker 4: got that litigation. There is for some people, myself included,
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  Speaker 4: there is a visceral thrill about that level of.
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  Speaker 3: Stress and that level of pressure, and we thrive on it.
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  Speaker 4: And so if you were to take away that three
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  Speaker 4: o'clock in the morning worry and so the only thing
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  Speaker 4: you've got to worry about is meeting the performance deadlines
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  Speaker 4: of the Ministry of Funny Walks, whatever you're working for, life,
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  Speaker 4: wouldn't it just would feel incomplete. So so pushing pushing
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  Speaker 4: the envelope and being just a little bit reckless and
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  Speaker 4: taking risks there. So there is a thrill to that.
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  Speaker 4: But I'm sure some of your listeners will be sitting well,
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  Speaker 4: we'll be.
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  Speaker 3: Aware of it.
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  Speaker 4: And sometimes you get through those three o'clock nightmares and
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  Speaker 4: you come out the other side and.
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  Speaker 3: You feel bullet brief and then you think, oh my god.
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  Speaker 4: Well and then and then you go and do something
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  Speaker 4: equally reckless to get those three o'clock chills back again.
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  Speaker 3: I don't recommend it that it's true for a lot
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  Speaker 3: of us.
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  Speaker 2: Well, that's true. It's about pople's individual makeup and capacity
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  Speaker 2: to deal with with stress. I guess stress can be
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  Speaker 2: a good thing. What would you.
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  Speaker 4: I mean, some people would be enormously stressed about hosting
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  Speaker 4: a radio show.
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  Speaker 3: You carry it off.
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  Speaker 4: It's just, you know, it's easy.
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  Speaker 3: You're doing it so well, you're doing your sleep.
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  Speaker 4: I mean, don't tell me you don't sometimes wake up
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  Speaker 4: at three o'clock in the morning you're thinking, oh my.
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  Speaker 3: God, I've got to I've got to interview this. I
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  Speaker 3: haven't done enough research for that. I mean, you you
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  Speaker 3: know you must it that it's a similar sensation you
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  Speaker 3: and you wouldn't want to lose it.
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  Speaker 2: It's more the pub, you know, that live public speaking
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  Speaker 2: on stage, when you can see the whites of their eyes.
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  Speaker 2: That that's where I get my chicks. That's what I
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  Speaker 2: quite enjoy it. So what would you guys be damien?
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  Speaker 2: Two business owners who are on the you know who
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  Speaker 2: are who have been through five years and wondering if
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  Speaker 2: they've got any more left in them to do another year?
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  Speaker 3: The don't don't go talk to an insolvency practitioner. And
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  Speaker 3: my colleagues will hate me for saying that. If you
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  Speaker 3: don't talk to insolvency pratitioner about what to do, it's
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  Speaker 3: like going to a dentist. The dentists will recommend a
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  Speaker 3: root canal. You've got to an insolvency petitioner, our advice
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  Speaker 3: will be, oh, you should look at out closer business.
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  Speaker 4: The best people to talk to is go and talk
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  Speaker 4: to your accountants, to go and talk to your lawyer.
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  Speaker 4: And because they have the ability to be objective, and
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  Speaker 4: they might say, look, you've asked me for advice. You've
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  Speaker 4: been running this for five years. The market's not going
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  Speaker 4: to shift. The business model doesn't work. It's time to
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  Speaker 4: call it quits, or they might say insolvency has a
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  Speaker 4: lot of tools to help businesses that have historically traded
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  Speaker 4: badly but are now trading in the black. So if
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  Speaker 4: you're sitting there in your business own and you think,
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  Speaker 4: oh goodness, I am my credit is there the bank
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  Speaker 4: that io the iod so much money? But if your
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  Speaker 4: business is actually trading profitably months to month, then you've
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  Speaker 4: got outstanding historical debts or legacies. Go and talk your
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  Speaker 4: accountant and your lawyer and say, look, is there a
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  Speaker 4: way that I can restructure my business affairs in such
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  Speaker 4: a way to draw a line in the same between
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  Speaker 4: my past trading and my future trading. And sometimes the
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  Speaker 4: answer is no, we can't help you for whatever reason.
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  Speaker 4: But sometimes the answer is yes. And a lot of
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  Speaker 4: times people come and see us and they've their lawyer
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  Speaker 4: account It brings them in, but it's too late. They've
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  Speaker 4: gone on too late. If we've seen them six months
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  Speaker 4: or twelve months earlier, we might be able to help
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  Speaker 4: them if they're in that situation. And see, this is
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  Speaker 4: the thing. It's like men and gps. We never go
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  Speaker 4: and see the GP until the growth is so big
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  Speaker 4: it's you know, it's jouring malignant men. We don't like
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  Speaker 4: to seek advice, but this is an area where it's
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  Speaker 4: really useful to go and get advice and talk to
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  Speaker 4: your accountants. You don't go rushing off talking to an
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  Speaker 4: insulvant a petitioner, because you'll you'll come out with the
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  Speaker 4: company and liquidation.
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  Speaker 2: Absolutely brilliant advice. It's so good to talk. We've got
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  Speaker 2: some great feedback. Thank you so much, Damien Grant, principal
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  Speaker 2: at Waterstone Insolvency.
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