Doctor Doom - portrait of a corporate undertaker

Insolvency expert Michael Stiassny has a reputation for being ruthless. Is this corporate undertaker as black as he is painted?

By CARROLL DU CHATEAU

For 10 years the name Michael Stiassny has struck foreboding into Auckland business circles.

A hint of his presence can start the sharks circling and send share prices into free fall.

As a result, companies such as the doomed Fortex and the much luckier, and better managed, Corporate Investments - value virtually zero in the early 90s, now worth $1 billion plus as Montana - have tended to minimise the fact that Mr Stiassny, corporate accountant and insolvency specialist, was chiselling away at the accounts, firing directors, cutting up credit cards and deciding whether a business was worth saving.

"People tremble at the knees, because if he appears in your organisation, there's something wrong," says former Stock Exchange chairman Richard Flower.

This year, Mr Stiassny's company, Ferrier Hodgson, topped New Zealand's annual review of receiverships, handling 22 insolvent companies.

Late last month, a syndicate of 12 banks appointed Mr Stiassny and partner Grant Graham to take on a stoush between Citic and Fletcher Forests. Analysts say that, at around $1.6 billion, it is the biggest receivership New Zealand has seen, and one of the most complex.

Says investment analyst Brian Gaynor: "This is more of a technical receivership. The two partners fell out completely, the partnership hasn't performed well and receivership is seen as a way of resolving the situation."

Citic, an arm of the Chinese Government, is seeking millions of dollars in damages from Fletcher Forests through the courts.

Fletcher Forests, on the other hand, is rumoured to be trying to get rid of its Chinese partner altogether.

Mr Stiassny relishes the challenge. "This job has got everything to make it exciting," he says from Ferrier Hodgson's workmanlike Queen St offices overlooking the Devonport ferries.

"We're selling a major asset on the international market, dealing with the largest corporation in New Zealand and an offshoot of the Chinese Government, with all the interest and peculiarities that brings."

Does dealing with the Chinese Government intimidate him? "No there's no reason."

Why did he get the job? He is ideal, says fellow insolvency expert John Vague, of McDonald Vague and Partners.

"They need someone quite tough. You seem to do better [in a complicated case] if you do a little bit of lateral thinking - not the archetypal accountant."

On a personal level, Mr Stiassny (LLB, BCom) is also seen as having the negotiating skills to maybe angle the Chinese out of the deal, the guts to bash heads together and the aggression to get things moving.

Certainly, he chews through challenges. His record includes everything from the receivership of No 5 Restaurant to Wilkins & Davies and a place on the Tainui advisory committee.

And, in a world where receivers generally are considered dirty dogs working at the tough, smelly end of business, his reputation goes one further.

"Even at that level [large corporate receivers] these guys are harsh," says a respected commercial lawyer. Why? "They don't take trading-on issues into account" - meaning they take no account of a company's long-term prospects.

Certainly, researching this profile produced unusual responses. People with reputations for burbling like drains block up at the mention of the Stiassny name.

One CEO goes so far as to ask that we do not even record the fact that he won't talk about Mr Stiassny.

Another international businessman endorses the tough guy image: "You've got to be a very hard person to do the job. He's a corporate fixit man - kicks ass, sacks people who are no good, turns things round."

There is also the danger of personal violence from people who have lost their jobs, income and future.

Another who hired him acknowledges "he did the job for us, got our money back, but he doesn't act in the best interest of the business."

"He's very quick - when he was appointed as receiver he just sacked everybody, 50 or 60 people, wound her up ... but I'm not sure he's the bloke I'd use if I wanted to manage the business out."

But, points out John Vague, a manager in trouble would say that: "We fight like hell for the debenture holder. What's the point of trading out a company, making it right then giving it back to the same fools of directors who made it go under in the first place?"

Now aged 44, Mr Stiassny graduated from Auckland University, joined Touche Clarke Menzies as an accountant, then left in 1990 to become a partner in the small Auckland office of Ferrier Hodgson, Australasia's biggest insolvency accounting specialists.

His timing was brilliant. With fallout from the 1987 market crash at its height, receiving was big business.

And as the toughest of them all, he rose to the top of the pool.

The firm's staff now numbers 31, and he and his partner have developed something of a good cop/bad cop routine. Mr Graham, son of rugby player Bob Graham and nephew of former Auckland Grammar headmaster John Graham, is the approachable one. Mr Stiassny fires the shots.

But he is not bulletproof. Take Iddison Vietnam where, after being on the board for 18 months, he left before the company metamorphosed into IT Capital and finally began making money. Then there is WEL Energy, where he was promoted to chairman after five months and left two years later.

He is still, however, chairman of Metrowater, committed to educating Aucklanders to cut water consumption, sort out the infrastructure and clean up the beaches.



With his casual Friday open-necked blue shirt and fawn pants, he is socially unostentatious.

The son of an Austrian refugee - "the name means happy" - he went to Glendowie College before university. He and wife Mary-Lou have three children, two of whom attend Kadimah, the Jewish school.

He is a great friend of entrepreneurial Newmarket dentist Peter Bolot and mixes with other prominent Auckland Jewish families.

Public relations specialist Jenni Raynish, who has worked for him, insists that he does not deserve his ruthless reputation.

"During the Tainui case he was really passionate about the rights of beneficiaries. He is deeply involved in right and wrong. I don't even find him a bastard in his commercial dealings - though I wouldn't want to go into an argument with him unprepared."

This fixation on right and wrong came up several times during my 20-odd interviews.

As a member of Tainui's high-powered advisory group, he told a December 1999 committee meeting that financial information was ill-prepared and incorrect and that Tainui investments were ill-advised and naive. Now that the whole advisory team is disbanded, all he will say is that the BNZ has been fully paid.

"We tried to help them [Tainui] get on a sound corporate footing. Unfortunately, we were not successful."

The Warriors, where he served briefly on the board, get a better prognosis. "Hopefully it has a future. We do need a member of the NRL in New Zealand."

But whatever others may say about his good works, Mr Stiassny's profession and style inevitably breed enemies. As Mr Vague says, "Receivers work with three things in mind: the debenture holder, the debenture holder, the debenture holder."

And themselves. People such as Mr Stiassny and Mr Graham command large fees, which are the first slice taken out of a receivership.

Most jobs, including Fletcher Forests, are charged by the hour. And the going rate for someone like Mr Stiassny is roughly the same as a top corporate lawyer - $300 to $500 an hour.

If he manages to work end on end - and he hunts jobs hard - he could make a $1 million a year.

But, he stresses, it is not all receiverships. "The bulk of our work last year was not receivership. Most was for Metlife and Tainui ... The rate [of receiverships versus restructuring] varies, sometimes over 50 per cent, sometimes considerably less, depending on the weather," he jokes.

"You always go in hoping to save a company. We all want to get things resurrected and save jobs - that's a great adrenalin buzz.

"The nicest thing that happens to me is when people I've been on a different side of the table later come to you and say, 'While we might not have enjoyed the experience, you did a good job'."