Can bankruptcy be a good thing?

Robert Fontaine is like a financial palliative care professional.

[ILLUSTRATION OMITTED]

Since 1980, he has been holding the hands of people as they file for bankruptcy.

He is the first to admit it's not easy, nor is it comfortable, to watch dreams fade.

So how do he and five other partners who independently own Fontaine and Associates Inc. reconcile themselves to making money off people's misery?

"We enjoy what we do because we eliminate a lot of pressure off people," says Fontaine, partner, bankruptcy trustee, receiver manager and proposal administrator of the company.

People usually just don't have financial issues, he says. They experience marital and family problems, too. Separation and job losses are the two main reasons for bankruptcy.

"We provide a relief mechanism that gives people a chance to get out from the burden of debt and get back into production.

"Bankruptcy is usually something positive for people that need it. It is not a negative thing. Some people think they are taking the easy way out. It is not easy."

People by nature are naively optimistic, he says. When they lose an income in a household and continue to spend thinking another job will surface, or when business owners don't think spending time or money on a balance sheet is critical, finances then begin to deteriorate.

"It is when business owners don't know their competition or accounting controls. A million dollars in sales doesn't mean anything if your costs are $1.5 million. These (kinds of business owners) suffer from the cash flow syndrome. Busy doesn't mean profit."

Insolvency proceedings for individuals, corporations and estates are handled at one of their five locations in Timmins, North Bay, Sudbury, Ottawa and Kingston. Satellite locations are also set up in smaller areas throughout the northeast and southeast regions.

Fontaine and Assoc. reorganizes companies, acts on behalf of clients to negotiate with creditors to pay back a portion of the debt over an extended time, and secures creditor receiverships. This is when a bank or court would hire Fontaine to take over a company's operations or sell off the assets.

Two-thirds of the firm's business is derived from Northern Ontario with an estimated 70 per cent from referrals.

Due to the nature of their business, a great deal of documentation and the constant monitoring of workflow is essential. Robert and son Brent designed a centralized computer system that monitors accounting functions and workflow from one area to another. If the Timmins office is experiencing an abundance of work, the North Bay and Ottawa locations can pick up the overflow. A central mailing and fax system allows information to be passed along expeditiously.

"Now we are trying to streamline the payment to creditors," Fontaine says.

The system also tracks client trends to determine where more emphasis is needed and how they can better serve the regions.

Of the six partners within the firm, Fontaine expects three to retire in the next five years.

Fontaine is honing his son Greg, 32, to take over running a portion of the business. Daniel Boulay, 40, and Francois Gilbert, 31, will also be successors.

"When you start realizing you're not invincible and you're not going to work for the rest of your life, well, you start planning. We have been planning for some time."

Each partner has a vested financial interest in seeing the company succeed. The more seasoned partners, including David Long and Yves Caya, work alongside the juniors to build up their business knowledge and management skills.

Incentives, as well as an opportunity to become a progressive part of the company's growth, are offered.

"You have to build all this," Fontaine says.

Partnerships are a rare success, but "our firm has always been very progressive thinkers. We communicate regularly and meet twice a year."

Fontaine and Assoc. began operating in 1980 with an office in Sudbury. Today, with a staff of 25 full-time employees, the firm has positioned itself as one of the top five trustees in Ontario and 12th in Canada according to statistics from the Superintendent of Bankruptcy 2003.

With branches across the north and southeast portion of the province, Fontaine is able to detect economic trends and parlay information into legislative policies through the Superintendent of Bankruptcy board, of which he is a member. He provides insights on servicing clients more efficiently, and what works best from the general mindset of clients experiencing debt overload.

He is also the co-vice-chair of the Northern Ontario Heritage Fund Corp.

Being a member of both agencies helps Fontaine maintain a pulse on the northern and southeast economies.

One of the stumbling blocks for the North is the small marketing base and the absence of a strong banking community where key decisions are made. If such engines existed "we would be better off," he says.

Most of the policies are made in Toronto, which discounts northern issues.

"They tend to poo-poo the North."

Leaving Ontario is not an option in his eyes. A unified voice representing the region to various levels of government could make a difference in attracting more Northern Ontario development initiatives.

www.bankruptcyontario.com

BY KELLY LOUISEIZE

Northern Ontario Business