Downturns and recessions affect all parts of the world – none are immune.
Many of our clients may see that we are an ‘independent member of Baker Tilly International’ without necessarily knowing what this means in reality for the firm and for Restructuring and Recovery. Baker Tilly International (BTI) is one of the world's leading networks of auditors and business advisory firms. Our guiding principle is to deliver exceptional client service. Our network spans almost 150 member firms in more than 100 countries. Our partners and staff, provide audit and assurance, tax and specialist advisory services to help businesses and organisations of all kinds negotiate risk and realise their potential, wherever they do business.
What this means for Restructuring and Recovery is that there is an interest group made up of insolvency practitioners in a number of jurisdictions across the world including: Ireland, Gibraltar, Germany, Dubai, Thailand, Australia, New Zealand, Canada, the US, the British Virgin Islands and, of course, the UK. All of these jurisdictions have genuine insolvency capabilities and we have worked closely with them to resolve financial distress.
We know the key people in these offices and regularly converse over global insolvency issues and meet at for example, conferences organised by INSOL, the global trade body for the insolvency and restructuring professions, and at regional and global BTI conferences.
As a specific example of Baker Tilly’s work overseas, our current involvement in the case of Awal Bank in Bahrain is described in the case study opposite. The Gulf states are suffering from the global downturn to varying degrees. Many businesses in the region, particularly in property development, construction and infrastructure that created the boom in the area, were under the impression that they were dealing with sovereign entities. This has been proven in a number of cases not to be the position. The creditor community is facing up to the harsh realities of taking discount (or at best rescheduling) on long-term debt in order to allow entities to survive. This in itself has knocked the confidence of the region which may take a while to recover.
The assignment in Bahrain has been challenging, exciting and extremely hard work, not least because of the political and jurisdictional issues faced by a situation with which Bahrain is not familiar, particularly as the bank in question was one of two of the first administrations ever commenced by the Central Bank.
In the wake of the global financial crisis, we are finding that there is an increasing call for our restructuring and recovery skills. Consequently, we are steadily building our global presence and at the same time deploying our expert staff from jurisdictions such as the UK, where they have built up their experience in assisting clients in distressed situations over many years. Downturns in the business environment affect all areas of the world and we aim to assist our clients and their advisors to achieve the best possible outcome from what are often difficult circumstances.
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Baker Tilly’s network of Restructuring and Recovery professionals enable us to advise clients and their advisors, both in the UK and elsewhere around the world, on the best solutions available to them in each of the jurisdictions, depending on how the exposure is structured. One such case involves our work with Awal Bank BSC in Bahrain.
In this case, Baker Tilly is advising Charles Russell LLP, solicitors, who are acting as External Administrator appointed by the Central Bank of Bahrain. Awal Bank was taken into administration after defaulting on certain of its loans. Such is the extent of the problem, that the case is at the heart of probably the second largest distressed debt issue currently facing the Gulf banking community, after Dubai World, and a great deal of attention has been paid to finding an acceptable solution for creditors.
We were able to mobilise a team of ten in the space of 72 hours, to provide a range of support services to the External Administrator, covering everything from managing bank premises and 70 or so staff, limited bank operations and the cessation thereof and the investigation of assets with a book value of US$5 billion held in jurisdictions both in the Gulf and other parts of world including the UK, Saudi Arabia and the Cayman Islands.
Baker Tilly International has a number of representatives in the Gulf states, including a practice with restructuring skills in Dubai. We are now working closely with our colleagues there to assist both local and international clients in resolving issues where they are exposed to defaulting debtors or where they themselves are facing difficulties.