Ted Gavin | Crain's Philadelphia

In this ongoing series, we ask executives, entrepreneurs and business leaders about mistakes that have shaped their business philosophy.

Ted Gavin

Background:  

Headquartered in Wilmington, Del., Gavin/Solmonese works with troubled companies, helping to guide firms through bankruptcy, corporate restructuring or leadership challenges, among other issues.

"We're engaged by businesses that are in distress or the stakeholders of businesses that are in distress," explains Ted Gavin, managing director and founding partner.

The Mistake:

At the very start of my career, our predecessor firm and I worked for a shipping and transportation conglomerate [that had filed for bankruptcy]. This was the operator of several ports; they ran a shipping line; they operated a freight carrier; they operated a bunch of warehouses—it was a very complex operation and there were a lot of different entities. We were engaged to avert appointment of a Chapter 11 trustee and provide independent management.

We worked for 23 of a total of 35 distinct entities, and as the case progressed, we came to learn that some of the other entities had diverted money away from the debtors, which badly needed that money. 

The debtors filed a lawsuit in bankruptcy court to compel these other entities to give back their money. I spent a lot of time on the witness stand in that bankruptcy case, because my job was to deal with the numbers. 

I remember distinctly that the attorney for the companies we were suing asked me, "Well, don't these companies have their own employees, and don't they have their own bills, and don't they have their own expenses?" 

What he was getting at was, why shouldn't they take this money from the debtor, if the debtor's not paying them? 

I conceded the fact that yes, they did—because they did, and that was the truth. I have thought on at least a daily basis back to that moment. What I didn't do was finish the sentence with, "But that would be a violation of the automatic stay that a debtor gets in bankruptcy. They should have come to court first and asked permission ... and they didn’t." 

You've got to think about the other issues that are in the penumbra of your decision.

The Lesson: 

It wasn't a wrong answer—they did have their own expenses to pay—and that's what the question was. But I didn't avail myself of the opportunity to add in something to the answer, and counsel for my side didn't argue, "Hey, this is a violation of the automatic stay." It wasn't necessarily my job to do that, but when you're being a witness, you want to take every opportunity to get your position before the courts. 

You kind of have to do that in all things business related. You have to take the opportunity to set the table for yourself as well as you can when you have it. 

Whether you're a witness or a business person making a decision, you've got to think about what other things can be affected by a decision. You've got to think about the other issues that are in the penumbra of your decision and take every opportunity to move the ball down the field, because you may not get another chance. 

Follow Ted Gavin on Twitter at @tedgavin.

Pictured: Ted Gavin. | Photo courtesy of Gavin/Solmonese.