The many obligations of BWM Group and LZTa were a noose around our necks. Like I had done previously with BWM Group, I contacted all of LZTa’s creditors and negotiated the best payment schedules I could. We of course wanted to make good on all of our obligations and pay everyone in full, if they would give us time. Happily, we did eventually resolve all the debts with the vendors.
We were insolvent. Both firms on their own were insolvent. Together, it was a real crises. We were in effect negotiating our own bankruptcy terms individually with each creditor.
Why do I tell you this? Well, I believe it was a common experience for architecture firms in the “Great Recession.” I believe the true achievement of this period was simply survival. I was determined to find a way to save these firms and institute financial practices, controls, and awareness that would prevent these same problems in the future.
The problem of financial insolvency existed at BWM Group before I arrived, and we accepted the challenge again when we acquired LZTa. However, by taking it on I became the face of the problem. I became the person calling creditors (who were often engineering consultants) and giving them the bad news that we would have to pay them over time.
I felt like I was the creditor’s hero because I knew the other alternative was that they would get nothing, ever. And I had the belief that this thing could be saved and that it was worth saving, and Philip Wanke did too. But I was the only one who was willing to tackle this problem with the creditors.
I had calculated that with our current cashflow, it would take us 7 years to pay off the debts. These debts were incurred by each firm separately making the same honest mistake: retaining staff too long when the workload did not justify it. I was right. It was about 7 years after I joined BWM that we finally paid off the last vendor debts.
The vendors did not see me as a hero. They did not want to accept 84 month payment terms. The best terms I could get were 36 months, the worst 8 months. It was impossible. We began to prioritize the firms that worked with us. It was not pretty, it was contentious, but we did not walk away. We stayed put and paid off everyone in the end.
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