What Do You Do If Your IT Consultant Goes Belly Up?

By Laton McCartney


What do you do if your technology consultant suddenly goes belly-up? For BearingPoint clients that's not a theoretical question. Last month the McLean, Va.—based consultancy entered its U.S. operations into Chapter 11 of the Bankruptcy Code in the Southern District of New York, listing assets of $1.76 billion and debts of $2.23 billion.


"Our day-to-day operations will continue uninterrupted and we want to assure our employees and customers that we remain committed to serving our clients and to providing world-class consulting solutions," said Ed Harbach, CEO of BearingPoint in a prepared statement. "This restructuring is an important step to secure a better and stronger future for BearingPoint and we expect to emerge from this process in an expeditious manner."


Fine, but in the meantime, what are clients to do? Here's what Gartner recommends:


    • Take an immediate survey of the work that BearingPoint is doing for you. Determine what part is critical to your business. For the critical work, devise a plan to mitigate risk.



    • Contact BearingPoint, examine your contracts and determine your areas of liability. Clauses in the bankruptcy filing may limit your contractual options.



    • Pay attention to service-level agreements, deliverables and turnover in project resources. Respond swiftly to any problems with projects as you would under normal circumstances.
    • If you're ramping up projects, reassess and determine whether you are comfortable with the risk.



    • Use extreme caution in considering contracting with BearingPoint until the restructuring is resolved.



    • If you find that BearingPoint provides unique skills, or savings for time or resources, due diligence is critical. If you do decide to engage BearingPoint before it emerges, include terms in your contracts to mitigate risk and protect your investments.


That advice is probably applicable to customers of any IT consultancy or service provider that goes the bankruptcy route.


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