Human trauma behind liquidations

Forensic accountant Peter Russell, who specialises in liquidations, sees the personal suffering every day that comes with the territory, writes Jennifer Hough

THE word ‘liquidation’ conjures up images of court, accountants, paperwork and penury.

But behind every business that goes bust there is a very human experience – loss, debt, unemployment and uncertainty.

Forensic accountant Peter Russell, who specialises in liquidations, every day sees the human suffering that comes with the territory.

And far from things getting easier, he believes the worst is coming down the tracks.

Increasingly, Mr Russell says he is seeing people who cannot afford to be liquidated – people who are left in a limbo of sorts and don’t know where to turn.

“I have had to turn people away because they can’t afford to pay,” he says from his aptly austere office in the heart of Cork city.

“These are people who have been clinging on, and have pumped all their money into the business in an attempt to keep it going. They have to liquidate but can’t afford to. I don’t know where these people are going to end up.”

Mr Russell urged business owners to liquidate in time, but for those who don’t, he said there was room for some sort of state-appointed office to deal with it.

“If someone can’t afford to liquidate they could eventually be caught for reckless trading and this would mean they are personally liable. It has to be dealt with, perhaps in the form of a state liquidator to help these people out.”

But for those who can afford to get liquidated, it is still no easy task.

Often, says Mr Russell, they feel a terrible shame in losing their business and having to let people go. There is pride attached to it, people feel they have failed, and they don’t know what they are going to do.

“Some people suffer very bad depression as a result of liquidation; I have to be gentle with them.

“They have no one to talk to,” he says.

Mr Russell runs an old-school operation in Trinity House on Georges Quay. His office, simple and almost Dickensian with its large mahogany table and bookcases, is open for anyone to walk into, but if needs be he will travel to someone’s home or business to talk there. Whatever they are most comfortable with.

But wherever the location, it is not a nice position to be in.

“When people come in they can be severely distressed and in shocking states. I sit them down and explain to them what is going to happen.

“They do not know how to deal with the situation. You almost have to act as a counsellor to them,” he says, mentioning that he has a counsellor on speed dial – just in case.

One especially nasty part of the process is the creditors’ meeting, a public meeting where the business owner has to face all those he owes money to.

“Creditors’ meetings are becoming more common now, but they can be nasty and these people are not used to this. They have to sit at the top of a table and answer questions, often from angry faces. Most people find it incredibly traumatic.

“I have met people who can’t even have a cup of coffee beforehand in the morning; they are shaking.”

Mr Russell believes all the smaller business which are crashing are softening the blow for those at the top.

“I deal mainly with small businesses They are taking the pain, the bigger ones are being spared at their expense.”

Since the onset of the recession last year, Mr Russell’s business has grown and is now mainly made up of liquidations.

“I was doing a lot of liquidations in the ’80s, then they stopped and there was not a sign of them until last year. The thing now is that younger accountants do not have the experience to deal with liquidations as they simply were not big business.”

Indeed, insolvency has been a growth area recently and its proper execution requires a very particular set of skills.

In response to demand, Chartered Accountants Ireland has designed a new diploma in insolvency course.

Mr Russell maintains he didn’t see the recession coming, but now it is here, it is perhaps odd that he finds his business is booming.

While he can’t complain too much, he says it is soul-destroying to see, day after day, people losing their livelihoods.

“Liquidation is such a traumatic thing, but it is important for people to remember they can come back from it and get their lives going again.”