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Employers also at risk in competitive business world

Employees are not the only segment who are threatened to lose jobs. In an increasingly competitive business world, the employers are also becoming vulnerable to such risks.

Due to lack of professionalism and managerial skills, any business could fall into a crisis situation at any time. In the recent past, this has happened in a range of business sectors in Sri Lanka. As a result, the professionals in the accountancy, law and banking sectors are now exploring the possibility to support such institutions by introducing 'business turnaround' practices. These professionals recently set up an institution called Business Recovery and Insolvency Practitioners' Association of Sri Lanka (BRIPASL) to address this issue.

"We need to address this issue in an organised and professional manner. That's why we have come together to establish this organisation," the Association's founder chairman Ajith Nivard Cabraal told the Daily News last week.

The Association's priority will be to formulate a plan of action and get the Government to introduce new laws to support the activities of BRIPASL.

The existing laws in the country are meant to protect businesses which are in the process of setting up to expand. "We lack laws to protect businesses which are on the verge of collapse. Even if we are to infuse recovery actions for such institutions, the new directors should be protected by law," Cabraal said.

Business recovery is a specialised area that needs skills. We need to train professionals who could undertake challenging roles to support companies to get out of crisis situations.

"In the event of supporting a troubled company, we need to get new directors/professionals on the board who will be working on a set target. These directors/professionals should be protected to carry out their duties without any interruption.

What happens now is that they will be indemnified and saddled with past issues so that professionals are reluctant to undertake such assignments. Therefore, we need new laws in this connection," he said.

The association intends to lobby to introduce such laws.

The Commerce and Consumer Affairs Ministry has already pledged its support under which the company laws are being formulated. "We have already had some discussions with government officials and a series of seminars to educate professionals is lined up."

Many companies fall into trouble because they only think of starting a new company and not about the consequences it would face following the take off. People need special skills and entrepreneurship qualities to run a successful business. Even when a company is facing a problem, the owners should learn how to handle the issue.

It's similar to a person falling ill - he needs to see a doctor, take medicine and ensure that he completes the full course of medicine till he has recovered fully. Companies should also go through this process. That's where BRIPASL will come in to assist, Cabraal said. Referring to the finances of the association he said that it needs the support of the members. Commerce and Consumer Affairs Minister Ravi Karunanayake has already allocated Rs. 500,000 as 'seed capital' and a few others have pledged support.

"We want to be pragmatic and reach out to every sector of the business and at all levels too. Entrepreneurs in our country are limited. If you kill them we won't have enough entrepreneurship. This association will teach them how to run a business." Citing an example on how to tackle issues, he said the association's first approach will be to identify the problem and address it accordingly.

If the problem is due to high cost of power, we may present them solutions to reduce that cost and use efficient energy systems, he said.

Cabraal said that the objectives of the Association were to play a leadership role in Business Recovery and Insolvency connected issues in Sri Lanka; encourage re-structuring of sick industries; promote mutual exchange of opinions and information; provide a forum for professionals; and to promote law reforms.

There would be three categories of members: regular members who would be existing members of the Bar Association of Sri Lanka, the Institute of Chartered Accountants of Sri Lanka, the Chartered Institute of Management Accountants - SL Division, the Institute of Chartered Secretaries and Administrators of Sri Lanka and the Association of professional Bankers of Sri Lanka.

He said that the Council would have the power to admit persons of other Professions as approved by the Council, as well as persons who can, in the view of the Council, contribute effectively to the objectives of the Association.

The inaugural meeting of the BRIPASL was held early this month at the Institute of Chartered Accountants of Sri Lanka. The Constitution was formally adopted by the founding members and the first Council was elected.

Chief Guest, Minister Karunanayake, said that the Government would keenly support the efforts of BRIPASL. He also pledged his Ministry's unstinted support and commitment to the organisation. Sumant Batra, Council Member of INSOL International, explained the role of INSOL International which is the International Federation of Business Recovery and Insolvency Institutions, worldwide and said that INSOL International is looking forward to welcoming the Sri Lankan Association to the World Federation soon.

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