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Former Laventhol, Horwath Partners Find There Is Life After Chapter 11
Date: June 28, 1995
Location: New Brunswick
Title: Former Laventhol, Horwath Partners Find There Is Life After Chapter 11
Author: Martin Daks
Subject: After their company went belly-up, these accountants made their own success story
It has been said that life imitates art. For accountants, life often imitates a balance sheet, with its debits and credits, pluses and minuses. For six accountants, former partners of the national accounting firm Laventhol and Horwath, which collapsed in a November 1990 bankruptcy filing, the pluses have finally outweighed the minuses.
“Life after Laventhol? It”s great,” says Ron Bleich of Bleich, Glass & Cardona. Bleich and his two associates were Laventhol partners. After Laventhol cracked apart like Humpty Dumpty falling off his wall, Bleich, along with Martin Glass and Ruben Cardona salvaged “75% to 80%” of their former clients and formed a new, albeit smaller, accounting practice. They moved their base, too, from tony East Brunswick leather and cherry panelled offices to a more utilitarian office suite in New Brunswick.
The other New Jersey partners also banded together. Even as Laventhol grew cold and stiff, Ron Drucker, Irwin Math and Sheldon Whitman set up operations in North Brunswick as Drucker, Math and Whitman. They, too, retained most of their former Laventhol clients, says Math. The former Laventhol partners set out to re-engineer themselves and adapt to a changing landscape.
For many years the state”s accounting profession was dominated by the Big Eight firms–Arthur Andersen, Peat Marwick, Ernst & Whinney, Price Waterhouse, Deloitte Haskins & Sells, Touche Ross, Coopers & Lybrand, and Arthur Young. Though not a part of the Big Eight, Laventhol was widely regarded as a high-quality firm, which would be ranked as part of the Big Nine if such a designation had existed.
But just as market forces caused some of the Big Eight to merge, becoming the present Big Six, market forces and lawsuits stemming from client failures spelled the end for Laventhol. Accountants still argue about the suits, claiming that Laventhol was unfairly held to a standard of responsibility that rightfully belonged to the clients” management teams. In any event, approximately 350 Laventhol partners around the country were at risk, jointly and severally liable for lawsuits, which at one point totalled some $2.5 billion. Ultimately each partner had to pay about $100,000 out-of-pocket as part of a settlement.
After the fall of Laventhol, the former partners arose like the mythical phoenix, recreated from the ashes of their former selves. This time, however, most of the accountants set up their new practices as professional corporations instead of partnerships, giving them an added degree of protection.
With gross annual billings of about $1 million, Bleich”s firm is a David compared to Goliath Laventhol”s average $350 million in annual billings. But, Bleich says, “We have pride in our name.” Adds Cardona: ” We hold the hand of a lot of our clients. You could say we”re their financial doctor.”
Even though they say the client base has increased by 40% since inception, the growth does not appear to have taken a toll on the firm”s members. On a recent Friday, the office was quiet, though busy. Bleich and his associates were dressed in a markedly un-accountantly style, wearing short-sleeved shirts and no ties. The trio confirmed that Friday is a “casual day, as long as no client meetings are taking place.” The same policy holds at Drucker, Math and Whitman”s offices. Laventhol never had a casual day policy, although Cardona says there had been talk about starting one.
Math says his firm”s business has “almost doubled” since the beginning. He adds that he “has never been happier” than being his own boss. “It went from terrible to idyllic,” he says, characterizing his journey from a bankrupt Laventhol to a smaller, but growing practice. Adds Whitman, Here we”re the owners of the business. It”s all up to us.”
If rave reviews by customers are any guide, both firms should stay busy for quite awhile. “I don”t need to read the books anymore, I can concentrate on running my business,” says Louis Antonacci, president of Elizabeth-based General Film Products. He feels comfortable with the trio handling the books for his company, which has 50 employees and produces polyethylene film used in products such as dry cleaning bags.
Another long-time client has equally strong confidence in Drucker, Math and Whitman. Lou Bonapace, the chairman of New Brunswick International, an electronics scale and software distributor in Somerset with $14 million in annual sales, has known Math for 30 years. Bonapace says that Math “knows our business very well,” adding that he is “very pleased” with the new firm.
Back in his office, Cardona gazes out a window as he marshals a parting thought about his former firm. “Laventhol had a book about itself published before it went bankrupt,” he says “The book dealt with the history of the company, and it only had 10 chapters. Unfortunately, the final activity of the firm was Chapter 11.” Only an accountant could tell a bankruptcy pun. u
