Hugh is the global head of Grant Thornton’s restructuring and recovery service, covering over 140 jurisdictions. Hugh has over 35 years' experience in restructuring and insolvency, including roles for the IMF, World Bank, and EU in sectorial insolvencies, state-owned enterprise restructuring, advising eight national governments on restructuring, insolvency, financial sector intervention and drafting related legislation. His experience ranges from trading large, distressed corporates to governmental interventions into state owned enterprises or distressed sectors.

What is the most fulfilling part of assisting financially distressed businesses?

Saving a business and the livelihood it provides people.  It sounds a little corny but it’s true. When you start out in your career it’s about the professional pride you take in the skill and technical aspects of solving complex problems, but as you become older and more experienced you realise the devastating impact business failure has on the workforce, creditors and suppliers. Mitigating or avoiding that damage provides a feeling of social worth to your work beyond the satisfaction you get from mastering a complex case. 

You have described your initial exposure to crisis management as a “baptism of fire”. Is this a universal experience for practitioners to have when starting out?

It depends on the scale of the case and the complexity of the problems, but I think that’s probably true. When a business fails there are multiple problems to deal with, all of which appear urgent and are competing for attention, and sometime interlinked. Added to that the original team are usually frayed and depressed by that point and building their morale and ensuring they stay committed is a challenge.  And just to top it off, you may not have much prior experience in that specific industry but have to very quickly to understand the major drivers in the business if you are to maintain credibility. As you get more experienced you get used to the stressors and learn how to both prioritise and maintain positivity, but the first few times out of the gate it’s a challenge.  

What was your most challenging case to date and how did you approach it?

The Leyland DAF case. It was a huge job by British standards at the time. My part of the wider engagement was to get the truck assembly plant running again to keep market confidence and maximise the chances of finding a buyer or a backer. We had 169 critical part suppliers, every single one of which had cut off supplies on credit, some of whom were facing their own collapse as a result, and a fundamental problem in that most of the critical componentry was single sourced. Basically 169 ransom creditors. And very little financing as well, so you couldn’t buy your way out of the problem. How we saved that business could take a book – but the critical components were:

a)     Demonstrating confidence – messaging from day one, both to the suppliers, market and the staff, was that it was possible to save the business – critical to maintaining management and staff morale, restoring customer confidence and getting supplier support.

b)     We recognised that once we built some trucks – any trucks – we would get momentum. We picked a limited range of vehicles to build that would minimise production issues and ensure early cash flow and focused on building those until we had repaired the supply chain.  

c)      We worked collaboratively with suppliers – the messaging was that if they wanted to have a customer going forward, let alone have any prospect of recovery of their unsecured and unpaid balances, they needed to invest in the solution and support us.    

d)     We publicised success – TV coverage of the production lines running again and the first vehicles rolling off – was massively helpful in restoring customer and supplier confidence, brand value and team morale.    

A large part of your work consists of traveling internationally to help clients on-site. What are the advantages of having “boots on the ground” as opposed to working remotely?

We may all be more used to working remotely than we were pre covid-19, but time difference hasn’t gone away. Trying to work remotely on a case with more than three hours’ time difference is enormously limiting. The human element is even more important. Working on high-stress cases requires trust and collaboration. Its one thing working on Zoom with people you already established working relationships with – doing that with new clients where there is no long-established basis is far harder. Nothing beats that direct, on-site interaction. It’s a lot easier being on site with the problem and dealing with the issues as they emerge in real time.       

How are rising interest rates from central banks contributing to business hardships, and how do you help mitigate them?  

Any increase in interest rates puts pressure on a distressed business, where cash flow is critical and failure to meet interest can constitute an event of default. The benchmark central bank rate is beyond your control, but a renegotiation of the lending terms that include that linkage is a routine approach to finding a refinancing solution. It can be easier if the client has the protection of a moratorium, but finding sufficient financial support for a restructuring is going to be critical irrespective of any moratoria on enforcement action. The core issue, as with any financial restructuring, is to adjust the financing to a level where the business’ future operational cash flow can realistically service debt and repayments. The rise in central bank rates is more an issue of accelerating crises and by putting additional pressure on cash flow, rather than creating a novel problem.  

Describe an instance when local, jurisdictional knowledge played a critical role in the outcome of a case.

We had an offshore fraud case where law enforcement in another jurisdiction attempted to seize funds the company held overseas in Switzerland, whilst at the same time a US court appointed receiver attempted to establish their control over the funds.  Neither had appreciated the difficulties a simultaneous and competing criminal freeze and a civil recovery would create, or the breach of Swiss law by a foreign-appointed official attempting to intromit with Swiss assets. Conversely we had excellent links with the Swiss regulators, trustee and lawyers which meant we could navigate the issues more effectively, and ultimately were able to negotiate the recovery of the funds.

What sets Grant Thornton apart from competitors in the restructuring and insolvency consulting space?

We have an international footprint that is comparable with the Big Four firms, but the pricing and staffing structure of the boutiques – providing a far greater personal involvement of senior team leaders, a lower overall cost but with local representation in crossborder cases. We are also more innovative – for example, we have an in-house fund that can be used to finance cases where liquidity is an issue or to share risk with stakeholders.    

As head of your firm’s restructuring and asset recovery practice, what lessons have you imparted to members of your team?

Nothing beats the importance of establishing good relationships built on trust and mutual respect – with your team, with clients, with the lawyers and other professionals you work with. Both in your immediate business environment and internationally. Everything else is subsidiary to being successful. The job is always bigger than one person, and being able to access others’ talent and work collaboratively is critical to winning work as well as executing it successfully.