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Hired Gun
And the year's not half over.
The Miami turnaround expert has many admirers and plenty of detractors. His champions portray Brandt as the perfect hired gun. Once he accepts a job, they say, he's hell-bent on winning. It's a trait that often outrages his opponents, who dismiss him as willful and opportunistic. Yet all agree that Brandt's methods have earned him a national reputation and a great deal of work.
In south Florida, Brandt is most closely associated with his crusade to recoup hundreds of millions of dollars for the creditors of defunct Southeast Bank. Since 1992, he's relentlessly pursued the Federal Deposit Insurance Corp. and First Union National Bank, claiming that First Union misled federal regulators with confidential information that resulted in the feds closing Southeast prematurely, then selling the institution to First Union.
In the process, he's taken on Miami's business elite, suing former Southeast board members and officers, and the bank's blue-chip law firm, Steel Hector & Davis. Brandt defends his strategy, though he concedes it may cost him some popularity points.
"Answers are due, and I'm being paid to get answers," Brandt says. "I took on the top dogs in Miami, who had to be held accountable for the failure of this bank, as well as the government, who I feel, and still feel, wrongly seized it. I got a few lumps in doing that, but that's my job."
Brandt hasn't suffered financially, though. He and his firm, Development Specialists Inc., have earned millions in fees and received plenty of praise from Southeast's creditors, who are receiving more than $250 million of the $400 million they are owed. It's been like that for more than 20 years, when Brandt set aside work on a doctoral dissertation in sociology to join a bankruptcy attorney structuring a workout for a faltering mining company. Brandt, whose family owned coal mines, understood the business and spent two or three years working on the case. He never returned to the academic life. By 1976, he'd founded Development Specialists in his native Chicago. The company has a staff of 35 in five offices nationwide and one in London.
Over the years, he's invested heavily in real estate, buying homes in Miami, suburban Chicago, Los Angeles, Maine and north Florida. He's always on the move and, he quips, "It's good to sleep in your own bed every night." He has another reason for investing in real estate: "I can't buy stocks. It would pose a conflict of interest, given my work. So I buy houses."
By Brandt's own reckoning, he's handled more than 3,000 cases, garnering a recognition that extends to the White House, where he has President Clinton's ear on bankruptcy law reform. In a field dominated by lawyers, the 47-year-old Brandt is neither an attorney nor an accountant. He's built a career on bold gestures, launching himself like an attack dog at his legal adversaries and drawing on an arsenal of unconventional tactics to achieve his goals. If that means angering judges, colleagues or even clients, he doesn't much care.
Harvard and the CIA?
He admits once going too far. In 1986, while testifying about his background in a Milwaukee bankruptcy case, Brandt stated that he'd received a master's degree from Harvard and a doctorate from the University of Chicago. He also said he worked for the CIA in the 1970s. Only problem was, none of it was true.
"I was trying to be sarcastic one night, at what was the end of an enormously long day. A guy and I were at each other's throats verbally with what we thought were witty and sarcastic remarks," explains Brandt, who holds a bachelor's degree from St. Louis University and a masters' from the University of Chicago. "It was the wrong place and the wrong time. It was supposed to be burning sarcastic remarks, but in the end, it just looked stupid. If you know me, you know that I reach for humor." The judge, who apparently was not amused, held Brandt in contempt and fined him $500. Generally, though, Brandt's methods get the results he wants.
"There's nothing wrong with pushing troubled businesses toward new horizons," Brandt says. "Every business is like a family. When there's a crisis in the family, sometimes an outsider has to come in and help. And sometimes someone in the family wants the outsider to butt out. I deal with that all the time."
Though large cases often bring millions of dollars into Development Specialists' coffers, Brandt's standard $300 an hour fee is considered modest. Though bankruptcy trustees are allowed to pocket up to 3% of what they recover for creditors, Brandt prefers to ask the court for a bonus if his billings don't reach the cap. He did that in one of his more memorable cases, the 1993 turnaround of Shape Inc., a Portland, Maine-based audio and video cassette manufacturer. Under Brandt's tutelage, the company emerged from bankruptcy, and the court awarded Brandt a $1.4 million bonus on top of the $2.4 million he collected in hourly fees. Brandt recovered $160 million for Shape's 6,000 creditors.
"Bankruptcy is all about imposing consensus when you can't get it voluntarily," Brandt says. "That's what I get paid to do."
That skill may be needed as he attempts to turn around Mercury Finance Co. Brandt became CEO of the Lake Forest, Illinois-based auto-loan company in February, days after the company revealed its earnings were inflated by $90 million over four years. The confession sent Mercury's stock plummeting 82%. With $1.1 billion in debt, Mercury might look like a goner, but Brandt thinks he can save it and keep it out of bankruptcy. "Mercury is already rejuvenating and resuscitating," Brandt says. "Mercury's situation is like the bulk of our work. It's a matter that needs to be handled outside the bankruptcy court through careful negotiations. These are negotiations you really couldn't conduct in the spotlight of the bankruptcy court." Brandt makes pulling Mercury out of its apparent death roll sound like just another job.
Mark Bloom, a partner with the Greenberg Traurig law firm in Miami, worked with Brandt on his Southeast litigation and credits him with the instincts of a fox. "He can take a complex set of facts and focus on an objective," Bloom says. "He can take sides that have nothing in common and bring them together. He has a lot of experience to draw on. Sure, he can be brash sometimes, but he believes that in order to succeed, you have to set your goals real high and go after them. He knows how to get creditors their money back, and that's why he keeps getting new business."
But others rebuke his methods. One example: in a newspaper interview last year, he talked about FDIC documents he'd obtained that would bolster his Southeast Bank litigation, thereby challenging a court order enjoining him from discussing the documents out of court. Angry U.S. Magistrate Barry Garber recommended dismissal of Brandt's case against Southeast's former board members and officers.
"Time and again, this court has sought to curb plaintiff and his counsel's prejudicial conduct by drafting the most direct orders it could fashion," Garber wrote, concluding that Brandt and his lawyer "do not understand this court's simplest and most direct order."
Hogwash, Brandt says. He maintains that the court order allowed him to talk about the documents, so long as he avoided specifics.
Since the early 1990s, Brandt has taken a serious interest in party politics. The walls of his downtown Miami office are dotted with pictures of Brandt hobnobbing with politicians, including the President and Hillary Rodham Clinton. Brandt says he's had an interest in politics since his student days, and gradually became more involved, as a Democratic fund-raiser and, later, as a leader in crafting the Bankruptcy Reform Act of 1994. His political passion led him to throw a major fund-raising dinner last summer at his Winnetka, Ill., manse for Bill Clinton.
Brandt vigorously denies any impropriety in hosting the affair, which raised roughly $1 million and attracted dozens of bankruptcy lawyers and bankers. In early May, The New York Times reported that several lawyers and bankers complained that Brandt "explicitly linked attendance at the dinner with a chance to influence federal bankruptcy policies." The article stated that the real guest of honor wasn't the president, but Brady C. Williamson, a bankruptcy lawyer Clinton appointed to lead the commission charged with revamping the national bankruptcy system.
"There is nothing to this story," Brandt maintains. "It reaffirms for me that there is a lot of meanspiritedness in the political world. This story was one mean political football. I'm not involved with Brady's work. The other side has decided to hit Brady below the belt."
As Brandt sees it, he got caught in the crossfire, a place he knows a lot about. In the business of restructuring and liquidating companies, the man in the middle can draw flak from both sides. As his company's motto - "We don't depend on repeat business" - suggests, Brandt doesn't count on a warm and lasting relationship with his former clients.
"In the course of his career, Bill Brandt has pissed a lot of people off," says Miami attorney Paul Singerman, who has worked for Brandt several times. "He is one of the most talented bankruptcy professionals in the United States. But his style offends some people as much as it impresses others. In the end, Bill is smart, he has a terrific organization and he has a hard-earned reputation for getting results."
