Accountingweekly recently interviewed business rescue practitioner (BRP) Louis Klopper who was kind enough to share some insight into what he does. One of the things that he is most passionate about is efficiency and this was revealed throughout the interview.
You may recognise Klopper as the person called in to rescue the Gupta-linked businesses. Although he did not mention much about the topic he did assure us that there is a great future for the companies involved and a positive outcome is anticipated.
Klopper states that it is important for a BRP to have a law or commerce background and be a member of a professional body.
“To be a practitioner you need to be multi-skilled and stay within the law”, Klopper remarks.
He told us that as a BRP coming into a business you are above all management and that your powers are at the same level as a director. This however leaves you subject to scrutiny therefore it is important to know your way around law and accounting.
According to Klopper they are given a mere 10 days in which they must assess the business and make a judgment on whether the business must be rescued or liquidated. One of the first steps taken is a staff meeting is held to inform the employees of the process and their rights. Secondly the BRP must assess the financials within those ten days to make his final judgment.
The creditors only accept the business rescue process if they can receive a return greater than if the business were to go into liquidation. Unfortunately, in some cases businesses are in far too much debt and have deteriorated too much for it to be rescued.
Klopper says a CFO’s most important quality is the ability to interpret financials. If they are unable to do this effectively and assess early signs of distress within a company, this then escalates into a much larger problem for the organisation.
Most problems within an organisation stem from poor decisions made by top of management. The result of these bad decisions often affect thousands of people who subsequently lose their jobs. A large percentage of these workers are caring for seven others in their family. This frightening thought is kept at the back of Klopper’s mind in everything he does within a business.
As a business rescue practitioner, the job may be rewarding but at the same time it may also be daunting. With the knowledge of how many workers and families are at stake, it is all the more motivation to ensure that a business can be rescued.