Saving the Tigers

When your economy goes belly-up, there's only one thing for it: call in the Brits. John Willcock reports on the export boom in crisis management

WHEN Tony Blair promised leaders at the Asia Europe Meeting (ASEM) in London yesterday that Britain would do all it could to help sort out the Asian financial crisis, he failed to mention that we are already doing just that.

A British army of accountants and solicitors is involved in fixing the shambles, as effective in its way as any "Cool Britannia" export such as the Spice Girls. For this is one area where we already lead the world: sorting out companies that have gone belly-up, or rescuing ones that are going that way.

In the upside-down universe of the insolvency practitioner, what is good for the rest of us means lean times for the liquidator. This is why plane- loads of UK company rescue experts have been flying to the Far East to sort out the current financial crisis, leaving behind a UK economy with the lowest level of receiverships since the Lawson boom of the 1980s.

It is a testament to the insolvency brigades' deliberately low profile that the Prime Minister probably did not have them in mind when he told Asian leaders yesterday: "We are not fair-weather friends, who turn away at the first sign of difficulty. But partners, for the long term, ready to stick by Asia through thick and thin."

Earlier this week, Sony chairman Norio Ohga warned that "the Japanese economy is on the brink of collapse". The sheer scale of the problems in Thailand, Singapore, Malaysia, South Korea and the rest of Asia is enough to make any liquidator salivate and any company-rescue expert flourish his slide rule. For example, Japan's banks have bad debts of more than $577bn (pounds 356bn). That compares with a peak for the UK high-street banks of pounds 6bn in the last recession six years ago.

Then there is the Japanese insurance sector, which has premiums of $5l0bn a year - as large as the US. And the Japanese life industry's assets total $2,000bn. Shareholders' equity in life companies now stands at 1.3 per cent of assets. As Colin Bird, an insolvency partner with Price Waterhouse, says: "This leaves them with a bit of a capitalisation problem."

Visit any four-star hotel in a major Asian city and you will find it fully booked, with the pin-striped British in residence. The list of company rescue experts who have headed out east is distinguished: it includes Stephen Adamson and Nigel Hamilton, the heavyweights of Ernst & Young who rescued Canary Wharf. Both are heavily involved in the same work in Thailand. Then, there is Bird and his international team who have made a specialism of big, complicated insolvencies since taking the lead in unwinding Robert Maxwell's trans-Atlantic business empire.

Stephen Taylor is the partner at Coopers & Lybrand who sits in London and decides which partners are sent to which part of the globe. As such, he has been closely watching events in Asia. Taylor is cautious about seeing Asia as a place for insolvency men to make money: "We haven't sent out aircraft carriers full of insolvency practitioners and plonked them in the South China Sea - we send people out as and when our clients want them," he says. Having said that, Coopers already has company-rescue people in Hong Kong, Kuala Lumpur and Singapore.

Recently, Coopers was appointed liquidator to CA Pacific, an investment bank in Hong Kong with many similarities to that other recent casualty, Peregine, also in liquidation. Jan Blaauw, a Coopers partner, is lead liquidator of CA Pacific, and faces the problem of sorting out more than 11,000 client accounts, including business accounts as well as individual ones. The accounts are currently the subject of a legal dispute, and the liquidation promises to be a long and complicated one. Like Bird, Taylor identifies the willingness by governments to implement the IMF reforms as a key to the problem.

Just take a look at Thailand to understand the scale of what has happened: 58 companies that lent to the property sector - where many of the problems started, forcing the country to devalue its currency - have been suspended. By the third quarter of 1997, a survey by Paribas Asia Equity estimated that of 197 non-financial companies listed on the Thai Stock Exchange, only 19 were clearly not insolvent. Another 140 were bankrupt and 38 were hovering between being bust and insolvent.

Taylor recently mobilised 87 ex-patriate insolvency people to fly out to Thailand to deal with a wobbling financial institution, but, in the event, they were not needed. These ex-patriates came from not only the UK, but Canada, Australia, Hong Kong and Ireland, too.

Other firms have also brought in people from English-speaking countries, where insolvency laws are broadly similar. And there is the ubiquitous Neil Cooper, now with Buchler Phillips, who has been involved both with Maxwell and Asil Nadir, of Polly Peck fame. Cooper is an expert on cross- border insolvencies and about to take over the helm of INSOL, a global body dedicated to improving multinational company rescue techniques.

Then there are the lawyers, as any accountant will tell you. Taylor says: "There is a problem of hotel space." Cameron Markby Hewitt, Lovell White Durrant, Denton Hall and Allen & Overy are all out there.

With all these highly paid Brits disembarking at the airports, every insolvency man has stressed the need to act with sensitivity. "It's vital to work through local firms. These are proud people, after all," says Bird. Most UK practitioners advise local businesses to avoid selling assets at the bottom of the market, however desperate the situation may seem.

If - and it is still if - the Asian financial crisis does blow over and the various countries manage to reform their economies over the next three to five years, then UK insolvency practitioners will be able to take a significant share of the credit.

This isn't just happening in Asia. British practitioners have been dispatched to Russia, the Ukraine, central Europe, and Romania. Mind you, it is doubtful that Tony Blair will be keen to promote the slogan, "The UK: liquidator to the world".