Wednesday, February 18, 2009

BearingPoint The Death of Professional Advice

BearingPoint (OTC BGPT) (NYSE delisted) finally went under. BearingPoint was spun off from KPMG in 2001 went into Chapter 11. BearingPoint web site shows an announcement that they have reached agreements with their creditors. There is something called “pre-arranged” debt re-structuring. The international subsidiaries will not be included in the proceedings and the company insists that they plan to continue providing all services to customers. The company generated spin headlines do not mention bankruptcy or even hint at financial failure.

There is something fundamentally unsatisfactory with a company of this stature whose DNA is from a supposedly reputable accounting concern going chapter 11. These guy’s have huge consulting contracts where they tell people what they should do. But they cannot operate their own business at a profit. The company has historically lost money. The shareholders are being wiped out. Other stakeholders must be in severe financial pain.

Where is the lawsuit to protect shareholders? If you cannot listen to the supposed high calibre of these accountants and consultants then professional advice is worthless or close to it. This company did not really do well for the past five years. The fundamentals were that expenses were greater than revenues. You have to ask if the offering and subsequent operation of BearingPoint was not gamed.