Here we go again.

Sometimes I just stand back bewildered at what goes on.  If you read “Why Arrium’s banks lost patience” (AFR 14Apr2016) you just may well be forgiven for simply throwing your hands in the air and saying why bother.

Clearly Arrium is a significant matter that will gain the focus of a very wide cross section of the community for a variety of reasons for some time, and rightly so, but the focal point of the start of the matter has had nothing to do with independent thought, corrective action, or future strategic planning, no it is all over who gets to control the administrator.  The Banks sought to have their team inserted, who had apparently been working on the case for more than six months.  An issue that would be a clear conflict in any lesser matter, but that’s another story.  Whilst the Unions wanted another team in because they had successfully worked together in the past and perceive that they will put the workers recoveries in front!

Now I seem to have a very different view to the majority when it comes to the Ansett matter as I regretfully feel that it was a matter that could have easily been handled better.  The change of appointment in that case came with a commitment to reemploy essentially the entire work force, something that the first administrator had flatly refused to do.  This was done, the change was made, the workforce returned and the business was ultimately offered for sale complete, with its entire workforce.  Regrettably this sale ultimately collapsed, with no alternative in place, because even the purchases asked “who was to fund the ongoing losses” and when it was clear that it would be neither the Government nor the Purchasers that would do so then the inevitable happened and the deal fell over, the business collapsed and the rest is history.  Now it is my view that had the Administrators taken a more pragmatic, commercial and independent stance and only put back into operation that which could be profitably run then it may have just been possible to have sold a smaller Ansett to a purchaser with a resultant improvement to dollar recoveries and quite possibly an even more significant reduction in liabilities, i.e. not all staff would have been made redundant.

If we want to get a better recovery system in this country then we realistically need to have a system that focuses on getting the job done efficiently and cost effectively, not one that gets side-tracked by individual groups fighting over who has control.

Many argue for a US style Chapter 11; well a Court may well have more control but it will come at a significant cost to creditor returns as the legal costs escalate.  Then again if the existing system destroys value, what does it matter?  A thorough look at what the real job is and what really does constitute conflict seems necessary because this one case clearly shows that even at the most senior levels there are fundamentally differing views.

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