Julie Hertzberg clearly remembers walking into Lehman Brothers on 17 September 2008, just over 24 hours after the United States government had announced it would not bail out the investment bank – an event often seen as the beginning of the global financial crisis. “Our entire team had assembled overnight, and we had no idea what we were walking into. I still have chills thinking about it because we knew something big had just happened, but we didn’t really understand the magnitude of it until we started to see it played out in the media in the days, weeks and months that followed,” remembers Hertzberg, Managing Director and Practice Group Leader, Case Management Services Group at global professional services company Alvarez & Marsal (A&M).
But in the fast-paced world of insolvency and restructuring, Hertzberg and her team did not have much time to reflect. “We were working on the frontline with the management and staff. Overnight these people had lost everything, they were just shell-shocked,” she says. “As an advisor, you just put your head down and do what you know how to do, which is manage chaos and keep everybody calm, be very practical, contain the damage, preserve value and, at the rapid rate that everything happens, move with that transaction.”
Hertzberg has worked in insolvency and restructuring for more than 20 years, specializing in complex reorganization proceedings, Chapter 11 bankruptcy as it is known in the U.S.
She is passionate about her field of work. “People, particularly accountants, don’t really understand that this kind of profession exists. But the reality is for somebody who has a finance or legal background, to make change the way that we do and to have such a positive impact globally is pretty amazing.” She also enjoys the brisk nature of the work. “Everything moves at an incredibly fast rate in restructuring processes. You learn very quickly that everything is on an expedited timeline and you just get caught up in the action of these cases,” she says.
A sudden change
Hertzberg, who is also President of INSOL International, the global federation of national associations of accountants and lawyers who specialize in insolvency, is like many in the specialization, having never intended to go into insolvency and restructuring. Instead she had her sights set on a career as an immigration attorney. She was so determined to pursue this that after completing her first degree in Spanish and Foreign Affairs, she specifically selected the University of New Mexico to study law, as it was one of only two law schools in the U.S. at the time that had a dual degree in Law and Latin American Studies.
But her plans changed abruptly when she took a bankruptcy class in her final semester. “It was probably a combination of the content, as well as the enthusiasm of my instructor, but I decided I wanted to look at pursuing bankruptcy as my career path,” she remembers.
After graduating, Hertzberg secured a job at law firm Pepper Hamilton’s corporate restructuring practice. “I was able at a very young age to practice on complicated and complex bankruptcy cases. I think anyone in insolvency and restructuring work will tell you that we really look at it as a hidden gem because there is so much ability to have an immediate impact in people’s lives and saving companies,” she says.
Her experience at Pepper Hamilton made Hertzberg want to pursue more international work, and she had the opportunity to join A&M almost 14 years ago and set up the practice she currently runs, focusing on bankruptcy case administration.
She describes herself as being very much an anomaly in the sector, as she comes from a legal, rather than a financial, background, but she sees this as a positive thing. It enables her to act as a bridge between the finance and legal teams as they prepare a company for the Chapter 11 process, which requires a lot of financial reporting to be interpreted in legal terminology.
A day in the life
A typical working day for Hertzberg is intense. “I usually get up at around 4 a.m. and start my day working on INSOL-related matters and responding to all the emails that come in overnight because I have the disadvantage of the U.S. time zone. Then I have very early morning calls.”
The bulk of her working day is spent running her practice group of 40 people at A&M, overseeing all of the information that they will file with the court for companies going through the Chapter 11 process, a task that is complicated by the increasingly international nature of businesses. “Chapter 11 is not necessarily specific to U.S. companies. We represent a broad array of international companies that, because of a connection with the U.S., contemplate using the Chapter 11 process as a way to facilitate whatever transaction they are trying,” she says.
In addition to her work at A&M, Hertzberg’s role as President of INSOL also involves a lot of travelling, and it is not unusual for her to visit Hong Kong, Singapore or Japan on a three-day turnaround. “I can safely say there is no such thing as 24 hours in a day because, the way my travel works, I am always gaining or losing 12 hours. You only do this job because you love it,” she says.
“I have a vision of taking the opportunities that I had available to me and ensuring I give those same opportunities to the young leadership.”
When she first started out, the aspect of her job that excited Hertzberg the most was the opportunities she had to work with major companies at such an early stage of her career, something she claims is unique to insolvency and restructuring. “It is really an adrenaline rush when you get into these big companies and you walk in the door and realize that every single person in the entire world knows the name of the company, and you are sitting there helping to make a difference in trying to save it,” she says. “You have access to meetings with the management of the company and are exposed to the high-level strategy discussions that are happening as you go about preparing the company for a Chapter 11 process.”
But as her career has progressed and she started the practice at A&M from scratch, Hertzberg says her priorities shifted and she now wants to transfer the excitement to the next generation of leaders, both in her practice group and in INSOL. “I have a vision of taking the opportunities that I had available to me and ensuring I give those same opportunities to the young leadership.”
She adds that while she found it difficult giving up the day-to-day work with clients, an aspect of the job she loved, she is very motivated by helping members of her team develop their technical and soft skills, and watching them go out and build their own careers.
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Growing complexity
One of the biggest challenges restructuring and insolvency practitioners currently face is the international nature of companies. “When you look at companies that are multi-jurisdictional, the insolvency and restructuring laws in some of those countries don’t correlate with each other,” Hertzberg says.
She explains that while in the U.S. you might have a payment scheme that prioritizes secured parties over equity, in a different jurisdiction, equity might have the prevailing position. “At the end of the day, you have to pick one primary jurisdiction that services the entire company, as you can’t have multiple sets of rules that contradict each other. It is something that adds a complication to our everyday practice but, at the same time, work is not fun without complications.”
These complications also represent an opportunity for her and her colleagues to learn about restructuring in other countries, and be creative in finding solutions. She adds that INSOL also plays an important role through its diverse member base in bringing people from different jurisdictions together and helping to build relationships and trust between practitioners in different countries. It recently hosted an event in Singapore in which 112 judges from 42 different countries were able to discuss in private what they considered to be best practices for insolvency and restructuring laws.
Another trend Hertzberg is seeing is a desire to use a formal judicial process to restructure companies at an earlier stage, instead of limiting this option to an informal out of court process, but getting to the point where there is no alternative but to put the company in a formal insolvency proceeding. “There has been a marked shift in the perspective of how you use the judicial process to effectuate a restructuring for a company.
“The U.S. has the Chapter 11 model, which is all about restructuring, but a lot of other jurisdictions focus on restructuring as an informal process and insolvency as the formal process. Now what has happened is people are contemplating these alternative avenues, in part because of the sheer volume of cases that have international relevancy or international touch points.”
She adds that there is a lot of momentum around which countries can establish new laws that favour restructuring, because people can see the value of this process in terms of saving jobs and encouraging investment in their jurisdiction.
But she points out that the professional fees associated with doing formal restructuring proceedings can be very expensive. “What I think you are going to see over time is a mechanism that has quicker resolution and utilizes less court resources, and potentially looks at using mediation or arbitration as a forum to expedite these processes and reduce costs,” she says.
Hertzberg decided to specialize in bankruptcy while studying law at the University of New Mexico. She is now Managing Director and Practice Group Leader, Case Management Services Group at Alvarez & Marsal.
President of INSOL
Hertzberg became President of INSOL, which is headquartered in London and has over 10,000 members in more than 90 countries, in May. She explains that the organization’s vision is to be the preeminent global insolvency and restructuring membership association. “A component of that is relationship building and strategically looking at problem solving and complex cross-border issues,” she says.
She adds that this means INSOL is active on many levels, working with insolvency practitioners, the judiciary and regulators to identify best practices, while it also holds regular meetings with the United Nations Commission on International Trade Law and the World Bank. “We are teaming up together to combine resources to have the most impact on helping jurisdictions create laws that favour investment and reduce risk,” Hertzberg says. “The only way to continue a global economy is if you have procedures in place that allow for risk management on investments,” Hertzberg says.
Earlier this year, INSOL opened an Asian hub in Singapore to help grow its membership in the region. “With everything that is happening in Asia, the sheer volume of people and complex issues, and the desire for investors to be present in certain parts of the region, it just made sense for us to look at putting a footprint somewhere in Asia. We have such a close relationship with Hong Kong and that will continue to grow as a result of having that proximity to the market,” Hertzberg explains.
“The only way to continue a global economy is if you have procedures in place that allow for risk management on investments.”
She adds that national associations, such as the Hong Kong Institute of CPAs, play a crucial role in the organization. “INSOL would not survive without the national associations. The structure of INSOL is a member-based organization from which the members are gathered by these local associations. It is so powerful, the way the footprint is set up, to ensure that all of the local associations have a connection with each other and to INSOL.”
She points out that INSOL’s recently held one-day seminar in Hong Kong was entirely driven by the relationship INSOL has with the Institute. “We hosted dinners together and networked and continued to forge those personal relationships. We couldn’t do that without local support.” Hertzberg adds how historically, one of INSOL’s strongest relationships has been with the Hong Kong insolvency and restructuring community. “Now, more than ever, we see the benefits of that international connection for the local professionals as they have access to colleagues in over 90 countries along with an additional close tie between the judiciary and regulators and their respective counterparts in these countries. As the world’s socio-economic and political systems evolve at such a rapid pace, this cross-border collaboration becomes essential.”
Hertzberg notes that Hong Kong has always had the fortune of being recognized as one of the world’s freest economies and ranked first in the economic freedom index in 2019. “Obviously the curtailment of trade between China and the U.S. has a spillover effect into Hong Kong. The good news is that Hong Kong has a strong legal framework to address these economic concerns and continues to exemplify governmental transparency in the face of these adverse conditions which allows restructuring advisors to use local judicial frameworks to provide long-term remedies for troubled companies.”
Inclusive leadership
Hertzberg is a big advocate of inclusive leadership, both at A&M and at INSOL. “The biggest reason is because everyone has different experiences, and you never know, walking into a room, what part of someone’s experience is going to lead you to getting the best result for a client,” she says.
She adds that a lot of the time when people talk about diversity and inclusion, they are talking about very specific identifiable traits, such as ethnicity or gender, and while this is important, she also sees the value of involving younger people in strategy discussions. “With technology, the world is a different place. Young people have access to things that allow them to be creative and come up with ideas that maybe older minds have just stopped thinking about.”
She is also passionate about mentoring young people who want to specialize in insolvency. “When people are starting out in their careers, sometimes it takes just one person to give them an opportunity that will spearhead lifelong success,” she says. “Sometimes they just need to get their foot in the door to be able to prove themselves, and if someone like me is not willing to give them that opportunity, we have no way to know what we are giving up in return.”
As a result, she looks at mentoring in terms of where she can have the most impact, pointing out that while some people have a lot of opportunities when they start out, such as having had a private education or tutors, others do not. “On paper, it may not look like the same candidate, so for me it is about really fine tuning the type of people that can be successful in this environment and looking at it through multiple lenses, as opposed to just trying to find everyone who fits the same profile. Then, ensuring that we work with them, not just on the technical skills but also in the soft skills that they can take with them wherever they end up.”
At INSOL’s 2020 conference in Cape Town, South Africa, her first conference as President, she will be announcing a new mentorship programme. “That is part of what I want my legacy as a President to be. I think for the survival of the profession, if we don’t take the time to mentor people and educate people about what it is that we do and why it is such a wonderful career, we won’t have another generation of professionals willing to step in as we look to retirement.”
Perhaps, unsurprisingly for someone who has such as fast-paced work life, Hertzberg does not slow down during her leisure time either. One of her hobbies is racing cars. “We are very lucky that close to our house we have a small racetrack with these car condos, and you can entertain there. We have a Ferrari, a Corvette and a Mustang racecar,” she says. “When I am home, I love going there with my husband and daughter and using the track and just relaxing a little bit.”
She also enjoys travelling and looks for opportunities that enable her to interact with local people. “On one visit to Tokyo, I set aside time and visited a market and gathered the ingredients to make soba noodles, and went to a woman’s house and made soba noodles by hand with her,” she says. “I have done a lot of other cultural experiences like that in other places around the world I have been lucky enough to visit. I love learning about how other people live and looking at the cultural differences and similarities and building relationships, which is also why I joined INSOL so long ago.”
INSOL International has 44 member associations comprised of restructuring and insolvency experts, and has over 10,500 professionals as members.
