Have you ever walked by a business and noticed a sign on the door announcing
a liquidation sale? If you look at the sign closely, you might notice that
it mentions the name of a bankruptcy trustee who is overseeing the proceedings.
Bankruptcy trustees are the people who take charge and look after bankruptcy
and insolvency claims from start to finish.
David Bromwich is a bankruptcy trustee. He began his career as a chartered
accountant in England in 1975. After some time, he moved to Kenya to work
as an accountant.
"When I was there, I got my first taste of an insolvency case and I found
it very interesting," he says.
After coming back to North America in 1978, Bromwich found work for an
accounting firm specializing in insolvency. He arranged to take a training
program in insolvency.
While he was engaged in the three-year course of study, Bromwich worked
for firms of all sizes. "You need varied experience. In small firms, you get
experience with bankruptcy. In medium firms, you get experience with bankruptcies
and receiverships. A trustee has a duty to many creditors in a bankruptcy.
He or she has a duty to one in a receivership," he explains.
"Receivership" is a Canadian term. Receivership is liquidation for a secured
creditor, usually a bank. With receiverships, there are real and tangible
assets, such as a mortgage that can be foreclosed or a car that can have a
lien put on it.
Bankruptcy means liquidation for a group of unsecured creditors such as
gas companies, phones companies and credit card companies.
In the U.S., they would simply be known as secured and unsecured debts.
"If you are entering this area, you need broad experience," says Bromwich.
"It is extraordinarily difficult to get your license unless you are familiar
with both bankruptcies and receiverships. For example, some people who have
only worked for big firms can't get a trustee's license because they can't
pass the oral board. They have no practical experience in bankruptcies."
Bromwich now owns his own practice and works with personal bankruptcies,
corporate bankruptcies and receiverships.
A typical day is fun. "There is never a dull moment. You have to keep 20
balls in the air at one time. If you work in a small office, you are juggling
a zillion files at one time. If you work in a large office, you might be assigned
just one big case, and that is all you do. Some people prefer one type of
work to the other. I like the variety I get from working with many cases."
Bromwich spends his time at a variety of tasks. He arranges liquidation
sales, locates auctioneers, meets with prospective insolvent individuals,
and meets with creditors and tax officials.
On other days, Bromwich might go out on site to take possession of assets
or to meet with creditors or company directors.
"Sometimes you might meet with someone who is pouring their heart out to
you and making you feel particularly miserable. You have to steel yourself.
A good trustee deals appropriately with the emotional side of the work," he
says.
"Some days you feel like an amateur psychologist, a marriage counselor
and a budget consultant all rolled into one. The important thing is to be
empathetic with these people but not get your own emotions involved. Otherwise,
you will burn out quickly. This is one of the skill sets that you need to
develop."
If you are thinking about a career as a bankruptcy trustee, Bromwich advises
you to understand that it is a senior profession, a specialization.
"This is a very narrow discipline. You have to know a lot about a little.
You have to start out by getting a broad knowledge first....Then dabble and
see if you like it."
Thomas Miller is a bankruptcy trustee who practices law. He became involved
in bankruptcy work because he likes financial law and he likes accounting.
He currently handles 600 to 1,000 bankruptcy cases a year -- about half of
his law practice.
"Bankruptcy trustee is a specialty of law or accounting,"
he says. "Learning how to do it is a matter of on-the-job training in the
U.S."
Bankruptcy cases frequently result in legal work, such as lawsuits involving
titles to property. "Often, I represent the bankruptcy estate in civil litigation.
I get paid my standard law rate as well as the trustee fee. It's another way
we are compensated."
Many of Miller's cases are routine. But sometimes he runs into a case that
requires a significant amount of work. One corporate bankruptcy has been ongoing
for 10 years.
On a typical day, Miller could be examining 20 to 40 debtors under oath.
In every bankruptcy case, the debtors appear before the trustee to give information
about assets, liabilities and transactions. Miller makes decisions regarding
whether to use written or oral testimony. He has to discover if there are
assets to be sold.
When there are assets to sell, the typical method is to have them sold
at public auction. Very few bankruptcy cases pay back all their creditors.
"If we do find assets over and above property exemptions, we file tax returns
and make a payment to the creditors."
Bankruptcy trustees are the last decision-makers. "I look at several bankruptcy
cases a year and make a snap judgment. It hasn't happened yet, but if I ever
make a mistake, I am responsible. I have a bond that is worth about $12 million,
and if I miss an asset, I have to pay. Bankruptcy trustees are private professionals.
We are financially and legally responsible for any mistakes we make."
Miller compares a bankruptcy trustee to a gatekeeper. Their work includes
a fraud examination function. When a person files bankruptcy, they might try
to conceal their assets. Many bankruptcies end up in criminal prosecutions
for failure to disclose assets or for lying under oath. The trustee is instrumental
in supporting these cases and reporting them.
"The exciting part is when you go to prosecutions," Miller says. "I have
sent six people to federal prison for fraud that I discovered they committed
under the bankruptcy system. Rightly or wrongly, I take that seriously. There
is nothing good about sending people to prison, but I feel good that I uncovered
some fairly clever fraud and was able to prove that I was correct."
If you are interested in becoming a bankruptcy trustee, Miller recommends
that you first get a professional degree, then decide where you want to specialize.
"Some people don't like this work because you are in detective mode all
of the time. You have to decide whether you are suited or not. You have to
have good attention to detail and you must be very comfortable with financial
transactions and numbers," he says.
"Lastly, you must remember that you are in an adversarial position. If
you want to make everyone happy, you won't do a good job. You have to be comfortable
deciding whether or not people are telling the truth."
Jennifer Rorison is a bankruptcy trustee. She says the work is rewarding.
"It's not just bankruptcies. We do a lot of proposals and counseling as
well. Often, we find an alternative to bankruptcy. Even if it is a bankruptcy,
that is just a means to an end. They can look at this as a new beginning and
learn from their mistakes. We are helping people overcome their financial
problems."
On the other hand, listening to people's problems can become onerous. "You
have to learn to set the stories aside and to distance yourself from the work.
You can still be human when you are dealing with people, but you can't take
their problems on to yourself, " she says.
Having a good team relationship is helpful. "The work environment is good.
It flows down to how we deal with our cases."
When Rorison received her trustee's license, she was the first female bankruptcy
trustee in her area. "That is the highlight of my career. First, getting my
license, and second, knowing that I helped open the door to other women,"
she says.
Her work has included corporate bankruptcies, personal bankruptcies and
business proposals. "I was the only trustee in this office for three years,
so I did a bit of everything. Now there are two of us, so we have separated
the practice. I handle most of the personals, and the other trustee handles
most of the corporate work. We support one another."
She notes that there are a lot of administrative duties to perform. Her
job involves marketing their services. "A lot of files come to us from the
banking community or from other accountants or lawyers. So you are always
out there getting to know the community and networking."
Rorison finds that the field offers variety, the opportunity to meet many
different people and the chance to work in a constantly changing occupation.
She recommends that anyone who is interested in this line of work consider
getting an accounting designation.
"My life would have been a little easier if I had had the accounting background,"
she says.