"Sky Capital Holdings in Manhattan, which invests in struggling firms, plans to double its 85-person staff in the next year. Still, president Michael Recca said he can be picky about whom he hires. "I'm not interested in newly minted MBAs," he said. But he will look at people with investment banking experience."
"His business won't necessarily suffer if the economy improves, he said. "I'm more interested in turnarounds when times are better. . . . I'm not sure a lot of Chapter 11 reorganizations are successful right now."
Going for Broke
As more companies and individuals fail, thriving bankruptcy handlers clamor for new staff
By Julie Claire Diop
STAFF WRITER
April 20, 2003
People watch their savings slip away as they hope for better jobs, or any jobs. Some wake up with nightmares about declaring bankruptcy. But few think about becoming bankruptcy experts to get back on track.
Yet law firms, liquidators and the U.S. Bankruptcy Court of the Southern District of New York in Manhattan are all hiring. A handful of executives in the turnaround and bankruptcy field even became interested in helping troubled firms because their own companies went through Chapter 11 bankruptcy protection.
Companies nationwide are spending up to $1 billion a year to reorganize or liquidate, according to Allan Brown, co-head of Manhattan-based Concordia Advisors LLC, which invests in distressed companies. In 2002, 79 companies with at least $100 million in assets declared bankruptcy - seven times as many as in 1994 - according to Stanford University professor Lynn LoPucki's bankruptcy research database. In the Southern District, which has courts in Manhattan, White Plains and Poughkeepsie, one large company filed for bankruptcy in 1994, compared with 22 in 2002, the slow economy being the main culprit.
Job opportunities vary widely. The Southern District court does not require job candidates in the clerk's office to have a background in bankruptcy. Appraisal firms are looking for people who can rattle off the value of a diamond ring or four-bedroom house in Queens Village. Law firms with bankruptcy practices generally only hire people with several years of corporate restructuring experience.
Manhattan's most sought-after bankruptcy attorneys earn up to $600 an hour, while entry level employees earn less than that for a week's work. Though there are no good statistics on how many people work in the region's bankruptcy businesses, firms say they are hiring at all levels, from secretaries to turnaround executives.
One firm that considers recent college graduates is Great Neck-based Keen Consultants LLC. It sells the leftover real estate of companies that are downsizing or dying.
"We are in expansion mode," said vice president Matthew Bordwin, who added that he can always make room for someone who is hard-working and smart.
Keen Consultants handles large deals, even though it has just 15 people. In five months it released former accounting giant Arthur Andersen from leases on 90 offices from Chicago to Tulsa, Okla. "We'll call 500 people in a day," said Bordwin. "We have a database of people who are buying." The firm earns money through commissions, flat fees and hourly rates.
Bordwin said he sees plenty of projects. But the weak economy even affects him, because buyers are harder to find. Hiring new personnel will help relieve his busy staff and enable the firm to keep up, he said.
Times also are great for a Melville-based appraisal firm, The Daley-Hodkin Group, which has 50 employees and is expanding by four to six appraisers, according to principal Joseph Hodkin.
Some of the best opportunities for career changers are in the turnaround field, where firms are hiring people with experience managing a staff or making executive decisions. "We're looking for people who are entrepreneurial," said Alan Cohen, chairman of Manhattan-based Abacus Advisors, which helps companies avert bankruptcies. "I prefer people who have a real desire to roll up their sleeves." His 18-person firm will grow as it finds these people.
For those with an entrepreneurial spirit ready for a new challenge, there are opportunities to start turnaround firms. Ron Fink, of Port Washington-based Tono-Bungay Consulting Inc., opened his firm in 1996 after running a family garment company that went out of business in the mid-1980s. He said he understands what clients go through when they cover payrolls from their own pockets.
"Most of the turnaround consultants...had a business, and realized this was something they could do," he said. They learned to navigate through bankruptcy with their own companies.
He draws up companies' financial projections for banks, decides who needs to be paid and who can wait, renegotiates office leases and goes to court. If a manufacturer relies too much on one supplier, Fink identifies others. And if the sales team is focused on the wrong customers, he suggests a new marketing plan.
"For people who have never gone through Chapter 11, it is extremely stressful," he said. Sometimes they deny they're in trouble, or they're angry their companies faltered. "My job is to get them from wherever they are to reality."
Fink is a member of the Chicago-based Turnaround Management Association, whose membership of 5,800 is growing 20 percent per year. New York City has 725 members, and Long Island 98.
Those with special expertise in bankruptcy are faring especially well. Few banks will trust a novice to collect the debts of bankrupt companies, even if they have to pay veterans hundreds of dollars an hour. "The field is so esoteric," said Brown at Concordia Advisors. "It takes time to get up to speed."
In many cases that means positions are only open to lawyers and MBAs.
Bankruptcy lawyers are in demand. "We're in our Christmas season," said Jeffrey Wurst, a $390-an-hour senior partner at Uniondale-based Ruskin Moscou Faltischek and president of the Long Island chapter of the Turnaround Management Association. "I believe it will last two, maybe three years."
The 60-attorney firm, which has a 10-person bankruptcy practice, is looking for two attorneys and an administrative assistant. "Of course we're growing," Wurst said. "I'm borrowing staff from other departments." The firm's last "Christmas season" was during the late 1980s recession.
Another law firm, Mineola-based Westerman Ball Ederer Miller & Sharfstein, hired Mickee Hennessy in September to expand its bankruptcy practice to 10 people. The firm is actively looking for another attorney, Hennessy said.
But she warns that the work can be challenging, especially when her clients are small businesses whose owners have guaranteed loans with their cars and houses. "It's a tough time to be in bankruptcy," she said. "The debtor cases, they can just break your heart."
Hennessy, 34, is working on a case now that has stolen many hours of sleep. She can't give details, but said her client lost his business, which he had bought by providing his house as collateral, after Sept. 11, 2001. She was worried about making a wrong decision that would leave him and his family on the street. His desperation had her strategizing about his case during the hours before she got to work at 9 a.m. and long after she left at 7:30 p.m.
Another bankruptcy expert, who sees the cases that unravel into liquidation, has spent years learning how to be professional when his clients are distraught. Kenneth Silverman at Jericho-based Silverman, Perlstein & Acampora LLP is a Chapter 7 trustee - handling liquidations vs. Chapter 11 reorganizations - for the region's bankruptcy courts. He divvies up companies' and individuals' assets once they've exhausted every other channel, taking almost everything they have left to pay off creditors. His 15-attorney firm is looking for two attorneys.
But candidates beware: The work isn't glamorous.
Silverman has handled 12,000 bankruptcies since 1989, and 800 last year, up slightly from prior years, he said. He's sold diamonds, prescription drugs and houses. He does not take people's clothing, with the exception of fur coats, which help reduce debt.
"Sometimes they cry, sometimes they're distraught, sometimes they break down," he said. "I'm generally considered measured and moderate."
Most people, he said, are honest. Still, he must troll for hidden assets. Many companies he's helped made up false receivables - money they expect to receive from customers - to get loans from banks. "I have a lot of cases where there has been fraud," he said.
Silverman enjoys those times when people feel he is giving them the fresh start they envisioned finding when they filed for bankruptcy. "I love my job," he said.
For those hoping to become the next Silverman, St.John's University in Jamaica began a master's program in bankruptcy four years ago. So far, 100 percent of graduates have found work as bankruptcy lawyers or clerks, according to law professor Robert Zinman, the program's director. He said it should be no different for his current class of 35. "My greatest thrill is when one of the large firms says, 'Can't you send me someone else?'"
MBAs also are flocking into the field.
Sky Capital Holdings in Manhattan, which invests in struggling firms, plans to double its 85-person staff in the next year. Still, president Michael Recca said he can be picky about whom he hires. "I'm not interested in newly minted MBAs," he said. But he will look at people with investment banking experience.
His business won't necessarily suffer if the economy improves, he said. "I'm more interested in turnarounds when times are better. . . . I'm not sure a lot of Chapter 11 reorganizations are successful right now."
New York University's Stern School of Business offers a bankruptcy course that attracted 136 students three years ago and 238 this year.
MBA student Shubin Jha, who lives in Manhattan, hopes that by working with Stern professor Edward Altman he will find a spot in one of the top firms that invest in distressed companies. "There are a tremendous number of opportunities available," said Jha, 29. "It's a growing field."
Still, competition for jobs can be fierce. Brown, of Concordia, teaches a class on distressed investing at NYU and refuses to look at resumes from his MBA students for full-time positions. They don't have sufficient experience, he said.
Brown will not disclose the size of his staff but said it recently expanded by one analyst. Five hundred people sent resumes for the opening, and Brown interviewed 60 candidates. It's a sign of how much interest has grown. A decade ago, "No one wanted to talk to us at cocktail parties," Brown said. "Now people want to talk to us because they want jobs."
Copyright © 2003, Newsday, Inc. |
