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Tag: Bankruptcy

Look, You Guys, You Should Really Be Thankful for Enron’s Bankruptcy

One of the first things I saw this morning in my Twitter feed was this missive from one of the Grumpy Old Accountants, Ed Ketz:


Now, I don’t know Professor Ketz personally, but my highly acute sarcasm detector is going batshit crazy. Less subtly, MACPA Editor Bill Sheridan gives us the timeline of the events that transpired starting with Enron’s filing. Bill gets a little weepy about the whole affair, writing:

Remember how utterly chaotic that time was? News that shook CPAs to the core surfaced almost daily, and the next day brought even worse news.

Okay, I was in college when Enron went bankrupt so I don’t remember things being “chaotic” unless you count the whole “9/11 was less than 3 months ago” thing. What I do remember was an Andersen partner who came to campus for our Accounting Society meeting (BAP didn’t have a chapter at my school) alone and he didn’t really seem to know anything more than what I imagine was being reported in the news and our faculty advisor noticed it too. So for him and his fellow partners, yes, things were probably royally sucking. And yes, things did get worse when Andersen was convicted* of obstruction of justice, surrendered their state licenses and closed up shop.

So maybe all that stuff is bad. Maybe it’s really fucking bad and it causes people to cringe to think about it but even Bill sees the upside:

You could argue that the profession is better off because of it. We took our lumps, rolled with the punches, and emerged on the far side stronger and more trustworthy than ever. “That which doesn’t kill you,” etc., etc. Still, I’m not in any rush to go through something like that again. Are you?

Jesus. Can we quit acting like Enron is still a big deal? Lehman Brothers was the size of ten Enrons. TEN. And Ernst & Young, no matter what happens, looks like idiots and continues to claim that they bear no responsibility and everything is still hunky dory. Andersen got off easy. Enron went bankrupt. The firm got fired. And fired again. And again. Then the firm died. The end. Their partners and employees moved on and everything was cool. I mean seriously, even C.E. Andrews got another job. If Ernst & Young continues on, they’ll have this hanging over them until something worse happens. Enjoy that.

But back to Enron. Thanks to Enron, we got Sarbanes-Oxley. We got The Smartest Guys in the Room. And we got that awesome Heineken ad. If you think about it, lots of you probably got your job thanks to Enron. Which means you probably owe your house, your spouse, your dog and a whole bunch of other shit to Enron too. You should be thanking your lucky stars that Jeff Skilling was such a ballsy mark-to-market wizard.

And yet people choose to remember it as, “That one time where we almost DIED!” And the mainstream press, in its blissful accounting ignorance, loves to dig it up in every article that is remotely accounting related.

I don’t know about you all but I’ve moved on. Enron was this bad thing that happened to the accounting profession but other bad things have happened – far worse things – and other equally bad things will happen. Maybe if people had learned something the last ten years and tried to do things better instead of maintaining the status quo, there wouldn’t be a French guy busting your chops. Here’s to the next 100 years. Thanks, Enron.

*SCOTUS overturned the conviction on a technicality (apparently an important one) but that doesn’t bring the firm back now, does it?

KPMG Finds Half of That MF Global Client Money; Still Not Making Any Promises

After apologizing for the slow pace, it appears the House of Klynveld has upped their game.

“We have so far collected about a half of the approximate $1 billion outstanding but it is hard to speculate on the final amount given we are dependent on third parties,” said KPMG partner Richard Heis in an interview with Reuters on Tuesday.

Okay, so there’s still half a bil out there somewhere. Anybody seen it? No? No worries, then. KPMG has a backup plan.

The administrator confirmed last week that it had sold MF Global’s stake in the London Metals Exchange to JP Morgan and the broker’s British metals desk had been offloaded to former rival FCStone. Heis said: “There are other parts of the business that could be sold and we are looking to sell them. We’re hopeful of making further announcements shortly.”

Your continued patience is appreciated.

KPMG recovers $500 million of MFG client money [Reuters]

KPMG Is Sorry for Not Sorting Through This Giant Charlie Foxtrot (aka MF Global) a Little Faster

Initially the House of Klynveld wasn’t worried about any MF Global clients getting their money back. Then yesterday we learned that plenty of people were pretty cranky, including one trader who thought the firm’s efforts so far were hilarious. Now, after a number of cranky phone calls and thousands of sternly-worded emails, KPMG is apologi[z]ing for all the “disruption” since they’ve been appointed as the administrator of MF Global:

“We are working with the companies’ staff to transfer client positions wherever possible. Where exchanges and counterparties have defaulted the company under their own rules, we have worked closely with them to try to optimise the outcome,” said Richard Fleming, UK head of restructuring at KPMG. “We understand the frustration among clients and market participants at the disruption that is currently being experienced and are sorry for the inconvenience this is causing. In relation to client assets and monies held by the company we are actively working to reconcile holdings and accounts in order to enable assets to be released as soon as possible.”

So, c’mon guys; I know it’s been over 72 hours but please bear with them.

KPMG apologises over MF Global disruption [FT]

MF Global Owes CNBC More Money Than PwC

As you may have heard, MF Global Holdings filed for Chapter 11 bankruptcy protection this morning. You may have also heard that for some strange reason, MF owes CNBC about $845k and change. Turns out, that is more money than it owes to PwC ($312,598), Alvarez & Marsal Tax Advisory Services ($65,000), The Siegfried Group ($30,000) and KPMG ($10,000) combined.


The bright side for P. Dubs is that they got most of the $12 million that they charged the company with last year. Of course if the shareholders take this bankruptcy as well as Lehman’s have (not to mention the NYAG and the State of New Jersey), then that really doesn’t serve as much consolation.

MF Global Bankruptcy Filing [via DB]

What’s Do We Make of BDO’s ‘Secret Settlement’ in the E.S. Bankest Dispute?

BDO is trying to put the E.S. Bankest/Banco Espirito mess behind it by submitting a “confidential agreement” to settle its litigation with the bankruptcy estate of E.S. Bankest, according to the South Florida Business Journal.

It sounds as though this could be put to rest as the bankruptcy trustee Barry Mukamal is quoted as saying, “I’m satisfied that this settlement is in the best interests of the estate,” although the creditors have to give the stamp approval as well. What’s not immediately clear from the article is to what extent Banco Espirito is involved in this settlement, the only mention being “”Lisbon-based Banco Espírito Santo and the estate of E.S. Bankest sued BDO Seidman regarding more than $140 million lost to a financial scheme run by former officers of E.S. Bankest.” I shot an email over to Steven Thomas who has represented Banco Espirito to sort this out and his spokesperson replied with the following statement, “BDO USA, LLP has entered into confidential settlement agreements with Banco Espirito Santo and Barry Mukamal, the bankruptcy trustee of E.S. Bankest, L.C., pursuant to which the lawsuits against BDO have been resolved.”

So when I asked if the re-trial was still on, I was simply referred back to the statement which kindasorta makes it sound as though this whole thing is over. But it still isn’t clear to me. Can anyone make sense of this? In the meantime, if I get to the bottom of this riddle, I’ll post an update.

BDO Seidman files secret settlement in malpractice case [SFBJ]