Fall protection should be a vital part of any construction project, according to Jeffrey Spatz, senior safety consultant with The Graham Company. In an industry fraught with risks, falls are a leading cause of serious injury and death. Virtually every construction project is going to have some sort of fall exposures.
“Sadly, according to statistics, we estimate that approximately 1,200 construction workers will die in 2008 from accidents on the job site and, of these, about 400 of them will be from falls,” Spatz says. “This is unacceptable.”
Smart Business recently spoke to Spatz about this topic to learn more about the safety standards for construction workers.
What is fall protection?
Simply put, it’s making sure no one falls while at work. Practically speaking, it’s taking the necessary preventive and protective steps to protect people from falls.
While this may be easier said than done, proper fall protection has become an absolute necessity and there are more fall protection products, means and methods available to implement today than ever before. Saying that it’s too hard or too costly has become an increasingly weaker argument.
What is the Occcupational Safety and Health Administration’s (OSHA’s) take on fall protection?
OSHA has thrown some possible confusion into their construction standards by having different trigger heights for fall protection. For instance, if you are working at an unprotected side or edge greater than 6 feet above a lower level without fall protection, you would most likely be in violation of OSHA’s fall protection standard. But, someone working from a scaffold at 9 feet on the same project would be covered under the scaffold standard instead and, in most instances, would be allowed to work up to heights of 10 feet without fall protection. For ironworkers, these heights range from 15 to 30 feet before fall protection is required, depending upon their tasks.
This disparity has given rise to an increasing focus on what’s called ‘100 percent fall protection.’ You’ll hear that term used when an owner of a project or the general contractor or construction manager institutes a policy where there’s a requirement for fall protection for any and all personnel working at heights of 6 feet or more, regardless of the work that they are performing.
Why don’t more contractors use 100 percent fall protection?
Both the execution and practical application have challenges. I’m an advocate of 100 percent fall protection, but it requires a fairly significant amount of planning in the design phase, during the bidding process and long before contractors mobilize on the project. Contractors who seem to have the most difficulty are those who have not had sufficient opportunity to plan for it or have not chosen to plan for it.
Although it’s over and above the OSHA requirements, it’s gaining momentum and more general contractors, construction managers and project owners are pushing it. More insurance carriers, who are underwriting the risk for these contractors and projects, are pushing this policy, as well, and I think they’ve been a major force behind it.
Who should be concerned about preventing falls?
Employers with employees exposed to falls. Keep in mind that OSHA holds employers responsible for protecting their employees and ensuring that they’re properly trained in fall protection. So if you have a construction company with employees who may be exposed to falls, it’s your responsibility to make sure that they’re properly trained. You can’t assume they’re adequately trained; you must train them or verify the adequacy of any previous training. It seems to me that verifying adequacy of training given by another employer is tricky you should simply train/retrain them as necessary to be sure.
What other policies are out there?
Several of our clients have instituted a guardrail disruption permit process. While a building is under construction, often the perimeters of the upper floors are guarded by cable guardrail systems. There have been problems in the past where a subcontractor who wants to load materials into the floors will take down the guardrail cable, load the materials in and either not put the cable back up or do it improperly. With this guardrail disruption permit process, anyone who wishes to disrupt the perimeter guardrail system has to go through the general contractor first and complete the permit. The general contractor then will have a crew of trained personnel take the guardrail down, allow the subcontractor to do whatever work it has to do, and then put the cable back up so that it meets the necessary criteria for strength and deflection. It’s something I’ve seen in use on high-rise projects, and I think it works well. I think it saves lives.
What else can be done to ensure safety?
Adequate training is one of the things we need to focus on more than anything. When it comes to training, the details really do matter. Training should be thorough. A 15-minute video may not cut it when we’re talking life and death.
JEFFREY SPATZ is a senior safety consultant for The Graham Company. Reach him at (215) 701-5454 or firstname.lastname@example.org.
Business owners are well aware of how expensive defending themselves in a lawsuit can be, and that the proper insurance can lessen the burden. What they may not know is that more than half of all corporate claims are brought by employees, making Employment Practices Liability Insurance (EPLI) a specialized form of coverage that’s worth investigating.
Alfonso Galvez, commercial insurance broker with Westland Insurance Brokers, points out that EPLI is often an afterthought for employers.
“Generally, people are so busy building their business, they lose sight,” says Galvez, a 20-year veteran of commercial insurance. “People are concerned about maybe the theft of a computer or a fire that might happen in their facility. But one of the most common claims that can occur would be an employee-related claim.”
Smart Business spoke to Galvez about the role EPLI plays in protecting a company’s assets in the event that it’s the target of a work-related lawsuit.
What is EPLI and what kinds of claims does it cover?
It’s specialized insurance coverage that protects employers against claims in work-related lawsuits. It includes wrongful termination, harassment and discrimination based on age, race and gender.
There’s also an option to purchase third-party discrimination and harassment insurance. For instance, in a retail store a patron may feel like he or she is being discriminated against because of race. Or it could be a situation where you have a manufacturing company and perhaps a vendor pays a visit and the receptionist harasses that individual. These are examples of third-party claims as opposed to claims that take place within the work force of a particular company.
Other employment-related suits that may be brought against an employer and are included in this type of policy are breach of an employment contract, negligent evaluation, wrongful discipline and mismanagement of employee benefit plans.
Who should consider EPLI?
I believe that every company should have this coverage in force. Companies that are most vulnerable are generally small- to mid-size companies. They may not have either the necessary capital to defend themselves against an employment-related suit or other resources, such as a human resources manager who is current with rapidly changing employment policies.
What kinds of expenses does EPLI cover?
Among the costs that are covered in an EPLI policy are such things as judgments that are handed down in court. It also includes coverage for general expenses to discover what the alleged claim is or what occurred. Also included are legal expenses, which particularly in California can rise rapidly.
How does a company assess its risk for employee-related claims?
It’s determined by the type of company it is, how many employees it has, and if it’s had any past claims history. It also depends on whether or not the company has instituted any kind of employment policies and procedures. It’s really important that the company have an actual employee handbook and policy manual to help reduce the likelihood of a claim.
Does employment law affect EPLI?
Yes, it really does. One of the challenges that most companies have is trying to stay current with all the changes in state and federal employment-related laws. That’s why it’s especially important to have this kind of coverage because it adds another layer of protection in the event something changes of which a company is not aware.
What else can EPLI coverage provide a company?
One of the newest features of many Employment Practices Liability policies is that insurance companies include free legal hotline assistance. A number of insurance companies provide a set period of prescribed time to call a designated law firm to ask questions about either employment law or a situation that has arisen within your company.
You can also get what is referred to as loss-control services. This provides assistance with the information you can include in your employee handbook and policy manual. For instance, you would include information related to zero tolerance in the workplace and state in the handbook how you would handle a report of an alleged harassment or discrimination incident.
Some policies also provide you the option of choosing your own counsel and therefore having more control over the defense and settlement of your claim.
ALFONSO GALVEZ is a commercial insurance broker with Westland Insurance Brokers. Reach him at (949) 862-3323 or email@example.com.
While every market has its variables, there are certain rules that all tenants should follow as they approach the process of reviewing and, possibly, renewing a lease.
“The most important thing is that time is your ally,” says Ted Garrity, senior advisor with CresaPartners. “Don’t put it off, because as you get closer to your lease expiration, your power to negotiate drops exponentially.”
Smart Business asked Garrity how to get the most out of lease renewals.
What are some issues that tenants may be facing at lease renewal?
It is an excellent time to evaluate their business and do some projections to see if they have the right amount of space and if their layout is efficient. If there have been changes to the business since signing the lease, are employees ideally situated to maximize their productivity? It’s a great time to restack the space and make sure that what they are doing works if they are staying in the existing space.
When should tenants begin to think about lease renewal?
The real function here is size and complexity; typically the bigger the tenant, the further out they need to begin. Obviously, if you’re looking at 200,000 square feet, there are not a hundred spaces in the market that are going to be able to accommodate you; in that case, you want to begin several years before renewal. Smaller tenants can wait a little bit longer, but you really want to start the process at least 12 to 18 months in advance. The shorter the time, the more leverage you are giving to your existing landlord. You cannot properly investigate the market and get space built out with three months left on your lease. If you are shopping for a car it is not a good idea to break down in front of the dealership. The later you go the more the landlord views you as a captive tenant and the more difficult it becomes to effectuate favorable terms.
How should tenants prepare?
Hopefully, you have engaged a real estate advisor who can help you evaluate your current space, how it meets your needs and what, if any, changes are needed to make it a better fit. You want to have somebody who understands your business drivers, is an advocate for you in the market and who is able to go out and create a good competitive landscape. There might be a scenario that’s compelling enough to get you to leave, even if your preference was to stay. I’ve seen it happen many times where another property is actually a better solution when you factor in all aspects. Even in a tight market, there are still opportunities for tenants.
What should a tenant negotiate with a current landlord?
The renewal is a very profitable venture for the landlords, because typically they don’t have a large build-out expense. Usually, they are painting and carpeting and maybe doing some minor restructuring of the space. This, in addition to having no down time, means that their costs are much lower than finding a replacement tenant. This is an ideal time to negotiate improvements to the base building you feel are needed (HVAC, lobby areas etc.) or to services (cleaning). In addition to looking for favorable economic terms it is also a good time to look at lease language. In short, everything should be on the table.
Often you’ve got some options pre-negotiated in your lease. In some cases, these renewal options are not necessarily great but because of market conditions or if you’ve leveraged the market you can often do better than the lease. Given the amount of leverage you have with the landlord you might be able to go back and change some of the original aspects of the lease that no longer work for your situation. If you started out as a 10,000-square-foot tenant and you’ve gone through several renewals and expansions and you’re now at 40,000 square feet, you’re going to be able to make a number of changes in your lease. It is a great time to reexamine the whole document and see what you can negotiate.
Tenants often overlook their operating expense pass-throughs and in a lease renewal you should look at resetting the base year.
Do you have advice for smaller tenants?
The process and things to look at are no different for a smaller tenant. In fact, there are always more options for smaller tenants in the outside market and thus they often have greater leverage. Should staying in the current space be the right business decision, a smaller tenant needs to be well educated on market conditions and make sure they are keeping all of their options open.
TED GARRITY is a senior advisor at CresaPartners in Philadelphia. Reach him at (610) 825-9618 or firstname.lastname@example.org.
No company is immune to the possibility of litigation. In the case that a claim arises, having policies concerning the retention and destruction of electronic data can take some of the hassle out of an arduous and expensive process.
“Businesses should understand now what their information technology (IT) systems are, how they work and what policies and procedures they may want to adopt with an eye toward the potential for litigation,” says Mark Goldner, associate at Jackson Lewis.
Smart Business spoke to Goldner about the new rules concerning electronic data and discovery.
What’s new pertaining to rules of discovery?
The federal rules of civil procedure pertaining to discovery were recently amended to more explicitly account for electronic data. E-mail would be the first type of electronic data that would come to people’s minds, but it could be spread sheets, presentations, financial information, or anything that is in electronic form.
A party in litigation has an obligation to preserve information that may be relevant to the claims or defenses as soon as it has reasonable notice of a possible claim. That obligation had always applied by implication to electronic data. The rule amendments, however, more explicitly deal with how the parties should fulfill the obligation in connection with electronic data.
This litigation obligation implicates what employers should be doing before a claim is made. In other words, employers should consider how they are collecting, retaining and destroying electronic data now.
What happens if a claim arises tomorrow?
If an employer is involved in a discrimination claim, the plaintiff has to go to a federal or state agency and file an administrative charge of discrimination as a precursor before he or she can actually sue in court. Because it’s an administrative charge and not a lawsuit, some employers may not consider their obligations in litigation. However, a defendant’s obligation to preserve evidence, including electronic data, starts at the notice of the administrative charge, which could literally be two or three years before the employer is sued in court. So at the notice of an administrative charge, a company really should take steps to identify and preserve any electronic data residing in any of its systems.
How should data be managed?
There’s no magic list of particular protocols but companies should have policies in place to understand how data is collected, retained and lost. For example, the company could have an explicit destruction protocol where it makes backup tapes every 30 days, saves them for a year and then destroys them. Or it may have a system where data is periodically overwritten.
The company’s IT department should be integrated into the management team, particularly when there’s a claim against the company. In litigation, you really rely on the IT guys to explain what the systems are and how they work and to help the human resources and legal folks come to terms with how the company fulfills its obligation to preserve electronic data.
What are some common challenges involved in electronic discovery?
One challenge of electronic discovery is the cost. The cost of production to the opposing party, which may entail figuring out what you’ve got, finding it and producing it, can be very onerous and include thousands of pages of documents. The other enhanced cost comes from discovery disputes. Disputes over electronic discovery can be time consuming, expensive and contentious. Imagine a company’s reaction to a plaintiff’s lawyer being allowed to root around the company’s electronic databases. Having good IT policies and procedures that are actually followed places a company in a better position to meet its obligations in the most cost efficient manner.
What might be a common dispute?
The new rules have an explicit safe harbor such that a party cannot be penalized for the loss of data due to the good faith running of its policies and protocols. Say all the emails on a company’s server are destroyed every 31st day and the company is put on notice of a claim on the 25th day of the 31-day cycle. Let’s say that because of reasonable notification procedures, it doesn’t stop its destruction protocol and loses all of those emails for that 31-day cycle. But, it suspends its destruction protocols and preserves emails in the next and subsequent cycles. If the company acted reasonably and the emails were lost due to a policy or procedure, it shouldn’t be penalized for the loss of that data.
On the other hand, if the company is put on notice of the claim and doesn’t do anything for six or eight months, then it probably hasn’t acted reasonably and is subject to what’s called a spoliation charge. If it’s found to have engaged in spoliation whether through negligence or through purposeful conduct a company can be subject to rather severe sanctions.
What should employees know about their company’s policies?
Employees have to know the company’s policies and understand what ‘deleted’ really means in general and on the company’s system. Even when deleted, e-mails often may be forensically recovered from a computer hard drive. And because ‘deleted’ e-mail may be revealed in discovery, employees should send every message as if someone is looking over their shoulder.
MARK GOLDNER is an associate at Jackson Lewis. Reach him at (412) 232-0404 or email@example.com.
The world is shrinking. Is your business growing to keep up? In an increasingly global market, education is becoming the business owner’s first line of defense against literally a world of competition.
“Change doesn’t happen unless you really accept it and have a buy-in by key decision makers that the international market does play a role in our future,” says Sheb True, director of the International Centre in Coles College of Business at Kennesaw State University.
Smart Business spoke to True about some of the changes required of American businesses looking to expand their markets overseas.
Can a mid-sized company compete in a global market?
It’s become easier and more affordable to find more markets around the world. It doesn’t mean that changes won’t be required, but you can find a similar want or need in a market that has demographics that match your target profile. For mid-sized players to play in a bigger space or to compete in a global world, they can also find partners.
More and more companies around the world are going to try to come from other countries into our market, as well as gain strength elsewhere, so eventually you’re going to have to look to external markets.
Growth is the top priority of most companies it’s just a natural part of being in business. But even if it’s not your particular goal, that growth will find you when other companies start to creep toward your market. Consumers are being served much more by companies that are more global, so if you’re just focusing on a local market, you could lose your target market to companies that are going international.
What kinds of changes will a company face?
First I think it requires an attitude shift. If you go into a new market thinking you’re not going to change anything, that’s the biggest mistake you can make the next mistake is thinking you have to change everything.
Education is the next step. That doesn’t necessarily mean a formal education, in terms of getting an international business degree or taking courses. It’s really just about learning about the process. In the end, business is business, but there are logistics and processes there, and there’s education required for understanding different cultures that you’re going to deal with and how business is conducted in that environment. That doesn’t mean just exchanging business cards, but also understanding how consumers and employees think in other markets.
It doesn’t mean there’s a 100 percent change required, but you have to apply a global marketing concept. You need to look for similarities in consumers and in how business is conducted. Stick with what’s worked. Then identify those key things that are different and that require a different approach or a different mind set and change or adapt to those as necessary.
How can business owners gain insight into international markets?
Basic reading is important, as well as just starting to become more aware. Reading about your industry in a different market from publications like The Economist to The Wall Street Journal international editions to trade publications that are focused on your industry in another environment.
Get involved with the U.S. Department of Commerce for trade and the American Chamber of Commerce. They put on seminars and have educational materials. Most nations are promoting trade in their countries, so they often provide literature.
Universities are important resources for their faculties and international centers of excellence, as well as the partnerships they develop with organizations around the world. There are also a number of organizations in Atlanta that provide people a means of interacting in that international space here in the U.S. Simply get involved with and network with those organizations that are there to promote and facilitate international commerce. Obviously the next step is to get involved with your target countries.
Finally, there are consulting companies that can help facilitate the process. Because, in terms of logistics, a lot of the process is outsourced as a mid-sized company. You’re getting import-export consultants or companies to help with certain needs. Really what mid-sized companies need to worry about is their strategy and the buy-in.
What industries do you see as really integrating into the global mindset?
They’re all getting there. Accounting is a great example. It has always been something that is very unique from country to country and the rules are significantly different in every market, but the big accounting players are very global. There is this relatively new development in the accounting world called XBRL. It is basically paving the way toward a global template of financial reporting. College students are beginning to train for this. With companies thinking more globally, your financial documentation should support a global perspective as the integration of all the functions of business come together in a global environment.
SHEB TRUE is the director of the International Centre at Coles College of Business at Kennesaw State University. Reach him at firstname.lastname@example.org or (770) 423-6076.
“Avoiding risk early in the process means defining the factors that lead to cost increases and schedule delays,” says Amanda Stratton, director of project management at CB Richard Ellis in Atlanta.
“There are three aspects of a project that drive its risk level. The budget should be developed early in a project, the scope of work should be clearly defined for use in the request for proposal (RFP) in order to obtain the most competent project team, and the project schedule needs to be aligned with the owner’s critical business drivers.”
Smart Business spoke with Stratton about the steps that business owners can take to make the relocation process as smooth as possible.
How are project budgets developed?
Budgets have traditionally been created according to historical data, but that’s not sufficient due to the escalating costs of construction. The project manager needs to use historical data as well as current market data and trends to create a comprehensive project plan. The budget must address the full scope of the project, while also anticipating cost increases in the future of the project.
Expand on what you mean by the project’s ‘scope of work.’
The more defined a scope of work, the fewer unanticipated cost. By clearly defining the scope of the project, the team will have a firm understanding of each member’s responsibilities and whether each can effectively execute his or her commitments under the time constraints.
Risk to the owner increases when gaps exist in the documentation or interests conflict on how to manage or execute a project. For example, an architect needs to have a clear understanding of the client’s intentions for the facility in order to design a workplace that is functional and cost-effective. Once the scope of the project has been defined, it should be documented in the RFP.
What is the RFP process?
The RFP outlines each team member’s responsibilities along with the risks assigned to each task. RFPs are generally used to procure architectural, engineering, general contracting, IT, furniture, relocation and other consulting services. The RFP should include a detailed scope of work for the project, the schedule, as well as any occupancy requirements, contract and insurance requirements, payment procedures and project budget. Once the proposals are received, the client should evaluate:
- Qualifications of the proposing teams based on their team structure and each member’s experience
- Proposed project strategy and schedule
- Client’s decision-making milestones as part of the process (in other words, can the client make decisions as fast as are needed to meet the schedule?)
What else should be considered during the planning process?
Managing the schedule is critical to mitigating risk on a project. The schedule should track team deliverables and project milestones, such as design presentations and completion of construction documents, ordering of long lead items, design/installation of IT infrastructure, furniture and equipment deliveries and relocation. The schedule should then be referenced to maximize the efficiency of the project delivery and balance the quality and cost factors. The role of the project manager is to drive the schedule to meet project due dates, understanding that pushing back the scheduled delivery can affect costs and quality.
AMANDA STRATTON is the director of project management at CB Richard Ellis in Atlanta. Reach her at (404) 504-7869 or email@example.com.
What might seem like the perfect acquisition opportunity may, in fact, create risks that threaten business viability.
Christopher Meshginpoosh, CPA, director of the Audit & Accounting group at Kreischer Miller, says that the development and execution of an M&A strategy must be based on careful consideration of the buyer’s business strategy, the pros and cons of both M&A and organic growth options, as well as common pitfalls in M&A efforts.
“The harsh reality is that the vast majority of mergers and acquisitions destroy value, rather than create it,” he says. “Deal-making is addictive and, far too often, buyers jump into transactions without proper consideration of strategic objectives and transaction risks, increasing the likelihood of failure in M&A initiatives.”
Smart Business spoke with Meshginpoosh about what to consider before entering into a transaction.
What steps should a buyer take before launching M&A efforts?
The foundation for successful M&A efforts is the development of an overall business strategy, which ordinarily includes the consideration of potential strengths, weaknesses, opportunities and threats. After identifying these elements, management can determine whether M&A transactions can help capitalize on strengths and opportunities, as well as address weaknesses and threats.
What questions should management ask when considering a potential acquisition?
The first question to ask is whether M&A is the only option. In some cases, it might be difficult to find a suitable target at a reasonable valuation, and overpaying the seller might jeopardize the solvency of the buyer.
In these cases, companies might consider whether strategic alliances, distribution or licensing arrangements, or establishing new businesses organically might be more cost-effective or result in a lower level of risk.
Do you recommend that companies focus on small or large transactions?
Unless a management team has extensive experience with mergers and acquisitions, it is often better to start small; the best acquirers tend to be those that are serial acquirers of comparatively smaller businesses.
How does a buyer know whether it’s paying the right price for a target?
Aside from performing extensive due diligence and preparing a quality of earnings analysis, it is important to make sure that an effort is made to identify a reasonable number of potential targets.
By broadening the pool of potential targets, the buyer can ensure that it identifies the candidate and transaction structure that result in the highest probability of achieving the buyer’s objectives in the most cost-effective manner.
What types of mistakes do buyers often make when negotiating price?
Companies enter into transactions with the goal of increasing shareholder value, and value creation is a simple mathematical exercise: Post-merger increases in income or cash flows must provide a reasonable return in comparison to the purchase price. Far too often, buyers fail to establish a walk-away price before starting negotiations and, as a result of the cumulative effect of small changes during negotiations, end up paying too much in relation to anticipated post-merger income. Failure is often almost assured before the transaction even closes.
Another common mistake is basing the purchase price on financial projections that include post-merger synergies. Synergies represent positive post-merger changes, such as increases in revenue or decreases in costs, that are the direct result of the buyer’s post-merger efforts.
By using the effect of these synergies to justify the purchase price, a buyer is essentially paying the seller for value the buyer is creating. Add to that the fact that up to 90 percent of revenue synergies and 70 percent of cost synergies are usually not achieved, and you have a recipe for disaster.
What aspects of negotiations, in addition to price, impact the success of M&A efforts?
It is essential that the roles and responsibilities of the target’s existing management team are clearly defined, and that those roles and transaction structures do not present obstacles to execution of the business plan.
For instance, in some transactions, buyers offer contingent future payments to the seller if the standalone performance of the target achieves certain thresholds during a period of time after closing of the transaction. Additionally, buyers often allow the seller’s management team to continue to manage the operations of the target after closing.
If integration of business processes is essential to the achievement of the buyer’s objectives, arrangements like these can undermine integration efforts because the seller is motivated to focus on standalone performance instead of integration. These issues are complicated but, if not addressed, can undermine the buyer’s ability to achieve its objectives.
In light of all of these risks, should management teams rely on outside experts?
Almost every transaction involves legal, financial, operational and human resources experts. While it is critical that the due diligence team includes managers who will be responsible for executing the integration plan and achieving post-merger objectives, the sheer magnitude of the effort, the complexity of the risks and management’s day-to-day responsibilities drive a need for outside experts. By selecting legal and financial advisers with deep hands-on experience with a wide range of transactions, management can maximize the probability of creating value in their M&A efforts and achieving strategic objectives.
Christopher Meshginpoosh, CPA, is director of the Audit & Accounting group at Kreischer Miller. Reach him at (215) 441-4600 or firstname.lastname@example.org.
When one of your customers files for a Chapter 7 bankruptcy, you’re not only losing a customer, but, in many cases, you’re losing whatever assets they might owe you, and even what they’ve most recently paid you for products or services.
“Even when there are no assets in the case, the creditor has the right to participate in the bankruptcy proceeding, ask questions of the debtor, find out about the debtor’s financial affairs, and find out what happened to the debtor’s assets,” says Larry McClatchey, director and chair of the Creditors’ Rights & Bankruptcy practice at Kegler, Brown, Hill & Ritter.
Smart Business learned more from McClatchey about what businesses can do when faced with the bankruptcy of one of their customers.
What rights does a creditor have in these situations?
Although a lot of bankruptcy cases are what we call ‘no asset’ cases and no dividend is paid, the principal right that a creditor has in a Chapter 7 liquidating bankruptcy is to participate in the case to try to get a payment on the claim if there are any assets in the estate.
Another right that the creditor has is the right to expose any wrongdoing on the part of the debtor. In a lot of cases, the creditor will know a lot more about the debtor’s business than the trustee in the bankruptcy case, or even the debtor’s attorney. Particularly if a credit manager has been working with a problem account for several months or a year, the creditor may have a lot of information about what the debtor has been up to. That information can be invaluable to the court or the trustee.
What is the first thing a creditor should do?
Carefully read all of the notices that are received from the bankruptcy court and pay particular attention to the various dates that are set forth in the notice.
There are three important dates to note: the Meeting of Creditors; 60 days later is the deadline to object the discharge; 30 days after that is the deadline to file proof of claim.
You’re not required to attend the Meeting of Creditors, but it is an opportunity to ask questions. If you’re talking about an individual debtor if you’re selling goods to somebody who is a sole proprietor and if they’ve engaged in any kind of wrongdoing before the bankruptcy was filed you can object to the discharge. The significance of the third date is that if there’s going to be any distribution to creditors, only creditors who file proofs of claim will be entitled to receive any distribution. You should use the official proof of claim form from the bankruptcy court, and you should attach an official explanation of your claim and copies of invoices or other documents that support the claim.
Creditors who have filed proofs of claim will share pro rata in the net proceeds of whatever the trustee recovers. My experience is that there are many Chapter 7 bankruptcy cases where a lot of creditors do not file proofs of claim, so the ones who do can get a pretty large dividend. The national average dividend in Chapter 7 bankruptcy cases is between 7 and 10 percent on the dollar. But if few creditors file claims you can get 25, 50, 60 percent dividend.
What steps will creditors need to take during this process to help ensure success?
Aside from filing a proof of claim, the most likely involvement that a creditor is going to have in a business bankruptcy case is if they are asked to repay a preferential payment. The bankruptcy code allows the trustee to recover certain kinds of payments made within 90 days before the bankruptcy is filed.
Creditors should think defensively and gather up all the records of the business dealings they’ve had with the debtor over at least the last year before the bankruptcy was filed. They should look for any information about concealed assets or property transfers that the debtor made. For example, if the creditor learns that the principal of the company repaid a large debt to a family member within a year before the bankruptcy was filed, the creditor should bring that information to the attention of the bankruptcy trustee and the court. The trustee may be able to get that money back.
If the debtor has committed some sort of wrongdoing, the creditor could take action to get a court order barring the debtor from getting a discharge. If there’s no discharge, then the creditor could still try to collect the debt.
What expectations should creditors have of the outcome?
Be realistic about the likelihood of a small dividend or no dividend. Take a look at the business you’ve done with the debtor and be prepared to defend yourself if it looks like you’ve been paid a significant amount of money by the customer before the bankruptcy was filed, because the trustee may try to recover it.
You do need to be a little careful here because the discharge and objections to discharge are really significant if the debtor is an individual. A corporate debtor that is being liquidated in a bankruptcy proceeding and has ceased operation does not actually get a discharge by law. There are obviously a lot of proprietorships out there and you could very well have a customer who’s an individual.
Work with an experienced bankruptcy lawyer to learn whether you are in a class of creditor with special rights under the bankruptcy code that will give you some additional protection.
Larry McClatchey is director and chair of the Creditors’ Rights & Bankruptcy practice at Kegler, Brown, Hill & Ritter. Reach him at (614) 462-5463 or email@example.com.
Taking the proper steps to protect some of the most critical information for how you conduct your business is paramount to its livelihood. There’s a lot at stake.
“There’s a 2005 statistic that says 70 percent of identity theft starts with an employee stealing personal data from their employer,” says Traci A. McGuire, director in the Litigation, Labor & Employee Relations and Health Care practices at Kegler, Brown, Hill & Ritter. “Although you want to be trusting of your employees, you also have to realize the far-reaching nature of technology and who has access to that information. You have to assume that once it’s out there on the Internet, it is available to the whole world.”
Smart Business learned more from McGuire about steps businesses should take to properly monitor their critical information.
What are the risks businesses face by not regulating employee access to information?
The No. 1 concern is that employees can steal confidential information and do a lot of damaging things with it. There are a number of cases where employees steal confidential information about, for example, a manufacturing process or something that would be of interest to a competitor. If they go to work for a competitor, they have information that’s going to be used against you.
An employer may have one view of what is confidential information. On the other hand, an employee’s job may be just one slice of how a company operates, yet that employee may have access to information he or she does not realize is confidential. An employee may think it’s appropriate to share information in an e-mail or on Facebook as part of a routine dialog, or even just in conversation. But the company views that as an egregious breach of sharing confidential information because of who their clients and customers are.
What can, and should, employers monitor?
Generally speaking, employers can monitor any kind of electronic media that they want, including an employee’s use of Facebook or Twitter, their cell phones, digital cameras, computers so long as they create a realistic expectation of privacy or the lack thereof for the employee.
An employer needs to first focus in on what information is important to the company and what they really want to protect. They can write a policy as broad as they want, but that’s only good if that’s what they really need. You have to be practical and realistic about how employees actually use technology. Is it really realistic to think that you’re going to control and prohibit each employee from doing any online shopping at Christmas time or from checking Facebook during the day? And do you really want to have that level of control?
You need to identify first what information exists within the business and what employees have access to. Do all employees have access to trade secrets, client lists, customer lists, or billing practices? The policy you’re putting in place also needs to address the specifics of the technology that you want to monitor. Do you have a policy that restricts the use of company-provided cell phones to work-related things only? The more sophisticated a business is, the more thought needs to be devoted to that process. Employers need to consider whether they provide laptops that employees take home, or whether they have an external Web-based system that could be accessed from anywhere, even if it’s not on a company-provided computer. You need to be thorough when you think about all the ways employees can access a company’s information.
Once the employer determines the type of media that the company wants to monitor, they have to decide how to carry it out. How are you actually going to monitor it? What are you going to do if you find somebody has breached protocol? You need to have a policy in place that’s consistent and treats employees uniformly during that process. You can’t treat one employee better or differently than another employee when something unexpected happens because you could be looking at the possibility of some type of discriminatory treatment.
How should employers communicate their confidentiality policies?
Employers have to inform their employees and put them on notice of their privacy rights. You can’t just monitor things and not tell them and then try to crack down. That’s not really going to be helpful.
Typically these types of policies are written into the handbook. And certainly if you hire somebody new, you give them a handbook, allow them some time to read it and then you have them execute some type of document that acknowledges their receipt of the handbook. For ongoing employees, as technology changes, obviously it’s hard to keep up, so you want to update your handbook. The important part is to get the employee to acknowledge that they have received the information that is a supplement or update to the handbook, that they’ve had an opportunity to read it and they understand what it says. It is those documents that are going to be the key part to being able to enforce the policy down the road.
Traci A. McGuire is a director in the Litigation, Labor & Employee Relations and Health Care practices at Kegler, Brown, Hill & Ritter. Reach her at (614) 462-5408 or firstname.lastname@example.org.
Social media can be a highly strategic tool for businesses, but only if they are prepared to invest in the resources to manage it.
“The shift to mobility and connecting is changing the way we do things, because it’s a constant stream of interaction,” says Mary M. Rodino, Chief Marketing Officer with CIMCO Communications.
While companies need to be involved in social media, Rodino cautions that there are key items to consider in order to create the most effective strategy.
“It’s important to have someone focused on your social media strategy to evolve it over time,” she says.
Smart Business spoke with Rodino about how a company can approach social media safely and effectively to further its brand, its products and its customer service.
Why is social media an important component in a company’s strategy?
Social media engages consumers and buyers in a whole new way. With so many consumers utilizing these applications, a company cannot afford to be ‘logged off’ when it comes to social media. While social media may not be a large part of your overall strategy, it can complement your current strategy and provide instant and cost-effective results.
For example, most companies monitor what is being said about them on the Internet. With social media, not only can they monitor what’s being said, but they can gain insight into product issues, gaps and vulnerabilities.
Customers may say, ‘I love this product, but I wish it could do this.’ For a software developer, consumer products company or a manufacturer, those are great ways to receive low-cost customer research instantly.
Social media can also accelerate your public relations strategy. For instance, if a company puts a press release out on the wire, all it takes is for one person to post it on Twitter and your release is instantly seen by the number of followers that person has. It’s instant exposure at a low cost.
What are the risks associated with social media?
The major risk associated with social media, or any technology, boils down to protecting internal systems. Make sure there is a barrier between the systems and the applications that keep your company running and the methods in which people can reach your organization.
Hackers and viruses evolve as social media portals are created, so it is vital that you do not leave your company vulnerable.
In addition, legal departments are concerned with the exposure of confidential company information. Your legal adviser will want to keep a tight rein on the type and the quantity of information being shared, as well as who approves and shares data.
Finally, executives may believe that social media takes away the control over buyer communications. They may think that social media is a portal to voice complaints and criticism that can never be erased.
How can companies protect themselves against these risks?
Work with your technology provider and let it know that you are implementing these strategies and ask about security solutions available to protect your company.
It’s also very important for IT, legal, human resources and marketing to work together to establish corporate policies and guidelines around social media. Each company needs to identify who can review and post comments.
In addition, some companies might consider restricting access to specific sites, such as Facebook or YouTube. There’s a risk of declining productivity and network bandwidth if your employees are on these sites all day.
Companies need to be open to negative customer reactions and be able to react when these criticisms are voiced. Look at it as a way to instantly understand issues/concerns and respond in a timely manner. Negative reactions can become high risk if you allow them to go unanswered. Social media can have a viral marketing impact, so make sure you are being proactive and managing your company’s responses.
How can a company begin to create an effective social media strategy?
The top priority for a company is to understand how its buyers use social media. For example, if a company’s target audience is IT service buyers, chief information officers, or vice presidents of IT, current research states that they use social media in the exploratory process of purchasing. It’s important that the vendor information is present on vertical market and industry sites, IT communities and blogs to specifically share what product, service or solution the vendor provides, how the vendor provides its services and what key values differentiate the vendor from its competitors.
The next steps for businesses in developing a social media strategy are to research and determine which social media portal is most appropriate for their buyers. Facebook might provide more visibility if a company is B2C or consumer driven. However, for a B2B company, LinkedIn might be more appropriate.
Businesses should create a social media strategy that uses the applications their customers utilize and then determine the level of activity necessary on those applications to make a positive impact on the company.
Mary M. Rodino is the Chief Marketing Officer with CIMCO Communications. Reach her at email@example.com or (630) 691-8080.