Behind the thin smile of Lehman’s pop-star pallbearer

Chris Blackhurst
17 Sep 2008

There is ritual to the very public death of a major company. One by one, the employees leave, clutching their few office possessions, occasionally stopping briefly for the waiting cameras and reporters.

Then, stepping blinking into the sunlight come the pallbearers. For Lehman's European interests, the firm of undertakers is Pricewaterhouse Coopers. Leading the ministrations is Tony Lomas, 51, chairman of its Business Recovery Group.

To those outside accountancy, Lomas's name is little known. But to those within the profession, he is famous — a regular in Accountancy Age's annual Top 50 ranking, the successor to the liquidation names of yesteryear, such as Christopher Morris of Deloitte & Touche, who handled the BCCI and Laker Airways collapses, and Michael Jordan from Cork Gully, who went into Barlow Clowes and Polly Peck.

Watching Lomas handle the questions with calm aplomb, it was hard to avoid the slightly queasy feeling that this was his moment. A bank has failed, thousands have lost their jobs, there is misery everywhere — and in, like dark-suited pop stars, walk Lomas and his colleagues. Of course, his task is to make the end less painful, to see what can be salvaged. But at the same time he gave the distinct impression of rather enjoying it. At one point, he even appeared to be smiling — a thin smile, but a smile, nevertheless.

According to those who operate in insolvency, there are long periods of inactivity when the economy is buoyant, followed by sudden bursts of work. So while much of the rest of business is worrying about the downturn and job insecurity, Lomas is one of the minority for whom business is booming.

He noticed an “upturn” in the number of restructurings worth hundreds of millions of euros last November and that trend has continued, now representing many billions. His section of PwC, with almost 1000 people (45 partners and 900 staff), is working on nine recoveries, each more than £1 billion, plus numerous smaller insolvencies. Last year, they did just two of £1 billion-plus.

Lomas, who leads City and International for the group but oversees the whole lot, is, you suspect, one financial practitioner who can definitely look forward to a bumper bonus this year. For all that, however, his is pretty unedifying work. Thankless, too.

Inside accountancy, the big-ticket insolvency experts are regarded as a breed apart. Theirs is known as the area of the profession most prone to the human failings of marriage breakdowns and drink. Roger Oldfield, co-author of the standard work International Insolvency Procedures and former senior insolvency partner at KPMG, once said: “The casualty rate by way of failed marriages and deaths far outweighs the proportion in the audit practice.”

They regularly meet hostile receptions. Partly, it's the nature of what they've arrived to do. Then there's the unavoidable thought they profit from the grief of others. Their work, by necessity, can also be painfully slow — leading to frustrations as creditors clamour for their cash.

Lomas, however, loves it. He has done nothing else. After leaving the University of London, he became a graduate trainee in 1978, moved into restructuring on qualifying, was made a partner in 1990 and has headed the division for three years. He's remained married and has two teenage sons. He's a Spurs supporter and likes to go hiking.

He's helped steer the break-ups and liquidations of a host of well-known names: the late Robert Maxwell's empire, Versailles trade finance, Cammell Laird shipbuilders, Tempo electronics, BoxClever TV rentals, European Home Retail (the parent of Farepak hampers) and MG Rover cars.

It was the latter that propelled him onto the bigger stage. He was in charge and had to deal with the Phoenix consortium of West Midlands businessmen who had bought the carmaker from BMW, negotiate a possible sale and somehow keep politicians and unions sweet.

He was on an Easter holiday with his family in Washington DC when he got the call that Rover was heading for the scrapyard. It came on the Thursday and by Saturday he was in Longbridge, near Birmingham, visiting the works.

Last weekend he was at it again, dropping everything to be present at Canary Wharf. Lehman executives were trying to help their bosses in New York sell the business. Lomas was already preparing the ground for after their failure.

It's impressive how anyone can assess a business of the scale of an MG Rover or a Lehman in Europe. But even by the time Lomas toured the car factory, for instance, he had a good idea of where he was heading. “It was clear we were going to have to make 5000 redundant on the Monday morning,” he said.

While that process was being readied he was already in talks with the DTI and the advisers to Shanghai Automotive Industry Corporation to see if the UK Government could extend a lifeline to MG Rover, and if the Chinese, who had been in a joint venture with the car firm, were interested in taking it on.

He was able to throw battalions of staff at the problem — 85 were drafted in from PwC to handle the mass redundancies. Other teams pored over the books, brought down the shutters and negotiated with the DTI and Chinese.

He keeps experts ready on standby around the world to advise on local tax issues, human resources, accounting, property — anything he might encounter. If the company needs interim, hands-on executive management, Lomas has a pool of 250 external turnround directors who can be parachuted in.

MG Rover had subsidiaries across eight legal jurisdictions. Enron's European affairs, another one of his, was similarly complex — and in its case, there was enormous US fraud to contend with. He reorganised the £2 billion debt of Drax, the UK power station operator, sorted out NTL, the cable TV company which owed £15 billion and oversaw the restructuring of sprawling Sea Containers.

Against some of that lot, Lehman's European arm seems a piece of cake, but he's warned that the unravelling of billions of pounds of derivatives contracts will make the administration as difficult as that of MG Rover or Enron.

Lomas likes everything organised just so. He's pragmatic and, predictably, given his job, he does not let emotion cloud his decisions. Of Lehman, he says: “The outlook is uncertain on a number of fronts. It seems amazing that a business as huge as this can fail.” You can hear the bafflement in his voice — you just know that if he'd been in charge, it would not have been allowed to do so.