ILLP students negotiate bankruptcy
How do you save a company from bankruptcy? And should you even want to? These were the questions the students from the International Leiden Leadership Programme had to face in a seminar on turn-around management.
Turn-around management is the science of changing companies so they can deal with present-day problems and avoid bankruptcy. This fascinating field of study was introduced to the students by prof. Jan Adriaanse, an expert in the field. In a two-part seminar, he first explained briefly how companies get into trouble and what they should do to avoid it, and he shared some of his own experiences in trying to turn companies around.
In the second part, the students had to work out an agreement on how to save a Hotel-Casino group in a simulation game developed by prof. Adriaanse and a colleague of his and adapted for the (International) Leiden Leadership Programme. In this game, teams of three students each represented a group with different interests, risks and finances and faced the difficult task of securing the best deal for themselves, while ideally avoiding bankruptcy.
For the duration of the seminar, some students became money lenders, some were trade creditors and two very lucky students found themselves portraying the owners of a failing Hotel-Casino group in Uganda. The students first set to work in their own groups, trying to understand their situation, their finances and their preferred options. After a short while, they progressed to a stage of negotiations with other parties.
Negotiations started quite relaxed, with a lot of jokes and mutual understanding, but as time wore on, a lot more frowning faces and heated discussions began to emerge. The owners pronounced themselves to be a family business with great values in a bid for sympathy, but ‘father and son’ were not given an easy time by their fellow students.
Under the added pressure of a countdown screen the last frantic attempts at a compromise took place. With only two minutes left, the tentative deal that was on the table was rejected by several groups of money lenders, and bankruptcy seemed unavoidable. However, with only seconds to spare, a new deal was made with the consent of all parties and the company was saved.
With this very close call, the seminar came to a satisfying end. Prof. Adriaanse complimented the students on their quick grasp of the complex material, but mostly on their resourcefulness and sense of humor during the difficult task.