Bearingpoint goes bust

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The irony of a management consulting company in bankruptcy proceedings cannot be understated. BearingPoint, by virtue of its bankruptcy has shown the lack of viable strategy, financial self-discipline and management wits that a consulting firm must offer its clients. BearingPoint's failure is a luminary tell-tale in management consulting. The executive team's failure began with the hasty acquistion of Andersen Business Consulting's resources and culminated with its own inability to establish financial controls and reporting mechanisms. Managing Directors were rarely involved in the day-to-day management of key accounts. Worst, middle management resources were making strategic decisions in accounts and purposely avoiding getting the Managing Directors involved.The streak of failed accounts is testimony to the lack of strategy. Veterans administration and Carlyle showed that BearingPoint could not handle the strategic thinking of large organizational changes. The Change Management process was inexistent and the only strategic concern was the next quarter financial numbers.Meanwhile, the company hired Mr. You to finesse the financial markets; rather than to lead the company. The gross mistake of issuing bonds put the nail in the coffin.

It is important to understand the difference between Chapter 11 and Chapter 7. Chapter 7 is the equivalent of "going into administration", and is what happens when a firm goes bust.Chapter 11 is a concept that does not exist in many locations, including the UK, where this article appears to have been posted from. It offers protection from creditors, and is tyically used to provide protection during a period of balance sheet restructuring, exactly as BearingPoint is doing now. Note that they entered into Chapter 11 voluntarily, and it was a pre-arranged Chapter 11, with the major creditors.During this period, BearingPoint continues to run itself exactly as it did before. It is quite distinct from having administrators appointed, as would happen under Chapter 7.Note also that the balance sheet restructuring, and the associated Chapter 11 filing, only applies to the US entity of BearingPoint, not any of the other entities around the world.