Why People Love to Hate Bankruptcy Guru William Snyder
Life has been a roller-coaster ride for the controversial turnaround specialist, who saves companies by acting like a skilled surgeon—cutting away dead weight to leave viable entities.
No clairvoyance was required to predict that testosterone would erupt inside the Fort Worth federal courtroom. After all, aggressive East Coast lawyers for bottom-feeding investment funds were jabbing and gouging at equally pugnacious attorneys for Texas Rangers owner Tom Hicks and Major League Baseball Commissioner Bud Selig over the Rangers’ bankruptcy sale.
At heated moments, pinstriped attorneys swore like foul-mouthed longshoremen. Creditors battled for every penny that could be squeezed from ego-fueled millionaires seeking control of the insolvent, but talent-rich American League ball club. During the team’s auction, two attorneys went toe to toe in a courthouse corridor, exchanging F-bombs in front of wide-eyed teenagers and other spectators.
Yet many parties to the dramatic and prolonged transaction could agree on one thing, at least: the full-bore loathing they had for one William K. Snyder.
There had been no dissent when the 51-year-old Snyder was appointed the ball club’s chief restructuring officer by the court. But within weeks he had both sides fuming. None of this fazed Snyder, a Dallas-based turnaround maven who’s little-known to the public but who had carried out coups resurrecting several large bankrupt companies. Among them: the nation’s biggest chicken processor, $7.6 billion Pilgrim’s Pride.
Snyder’s reputation among restructuring professionals held no weight with Chuck Greenberg, who called him an unparalleled double-dealer. The Pittsburgh sports attorney would end up buying the team along with Nolan Ryan and others in an Aug. 4, 2010, auction, which they had strenuously and tactically opposed.
At critical junctures, Greenberg thought he had convinced Snyder to abandon the auction so his group could acquire the club without the uncertainties of competitive bidding. “I’ve met some duplicitous people in my life, but he set a new standard,” Greenberg said of Snyder.
Perturbing Greenberg were Snyder’s “flip-flops” that not only agonizingly prolonged his group’s acquisition of the World Series-bound team, but also helped boost the club’s eventual sale price by nearly $100 million. That higher price proved a bonanza for debt holders, because it meant a return of nearly face value on various loans that Hicks had taken out, and later defaulted on, against the Rangers and other of his sports and real estate holdings. It’s believed that these creditors had snapped up slices of Hicks’s defaulted obligations for as little as 40 cents on the dollar—and now they would be reaping 100 cents on the dollar.
By complicating an easy succession from Hicks to Greenberg-Ryan, Snyder was savaged on local sports radio and by partisan columnists, the attacks likely contributing to the emailing of death threats against him. The threats were taken seriously enough to prompt heightened security around Fort Worth’s federal courthouse and the involvement of the FBI.
So who is this William Snyder, a man eliciting such unbridled contempt, but not seeming to mind in the least?
Few of last summer’s legal combatants knew of Snyder’s unlikely path to Judge D. Michael Lynn’s courtroom, where he was such a pivotal figure in the half-billion-dollar Rangers transaction.
Snyder, at age 27 with his Ferrari.
Snyder was born on a Peruvian sheep ranch, became a multimillionaire by age 27, then lost his businesses, sprawling trophy home, turboprop plane, Ferrari, and wife, all seemingly in one fell swoop. But the chastening experience of putting most of his own companies through bankruptcy allowed Snyder to reinvent himself as a “crisis management” expert. He has since become a standout in the turnaround industry, which moves billions of dollars and affects thousands of lives.
Snyder spent his early childhood near the Peruvian town of La Oroya, where his father had settled the family. The elder William K. Snyder was a Wyoming-reared, John Wayne-like character who had flown gliders during the D-Day invasion and several other World War II operations. Young William, the fifth of six tow-headed children, attended a local school and got about on a burro named Elvis.
But soon enough the gringo newcomers found themselves caught between angry, land-hungry peasants and land-grabbing foreign mining interests. Once, when gunmen approached after the family station wagon broke down on an isolated mountain road, Snyder’s cool-under-fire father told his mother and sisters to run for home. Then he ordered 9-year-old William and his older brother to clean out a clogged carburetor while he held off the armed villagers with hot lead. No one was hurt.
The family’s South American adventure ended when the embattled sheep ranch was nationalized in 1969 by a left-wing military government. Snyder’s father transplanted the clan to Alaska, splitting the children between Anchorage and Umnak, a tiny Alaskan island in the Aleutian chain. There, the elder Snyder salvaged copper from an abandoned air base and ranched sheep. Five years later, the native Aleuts demanded their land back and the family again found themselves dispossessed.
Between Peru and Alaska, the family had a stopover in Laramie, Wyo., where the children were introduced to American public school education. On his first day, not knowing the words to the Star Spangled Banner, Snyder intoned the Peruvian national anthem—and was promptly marched to the principal’s office.
After Alaska the family settled in Corpus Christi, where Snyder’s mother, Lyle Knight Snyder, would run a pet store. “Moving that many times was hard and I left my friends behind in Peru,” William Snyder says. “I had to start all over again at 14 in Texas. You’ll never be the ‘popular kid.’”
Following two years of junior college, Snyder studied math and computer science at Texas A&M University, graduating cum laude. For a business school master’s thesis project, Snyder decided to convert his wife’s family business from the IBM3 computer system to an HP3000. In so doing, he discovered that the business was on the rocks. The Dunnam family enterprise—the local Coca-Cola distributor, which it established in 1908 and called the American Bottling Co.—“had $12 million in sales and owed over $15 million,” Snyder recalls.
He had a job waiting for him at Shell Oil upon graduation with an MBA from Corpus Christi State University (now Texas A&M University Corpus Christi). But his grandfather-in-law, Sam W. Dunnam Jr., asked Snyder to rescue American Bottling. “We can’t bankrupt it,” the septuagenarian patriarch told the 21-year-old Snyder. “You’re a smart kid, so you run it.” And he did. The year was 1980, and it would be his first turnaround.
Snyder borrowed $1.8 million against the truck fleet and paid down overdue sugar, syrup, and fuel bills. He scrapped a “perfect route system that didn’t work” because it had customers dealing with a different driver every week. He adapted a more pragmatic routing system and added forklifts to the back of the bigger trucks, allowing him to eliminate a third of the vehicles.
By the end of 1984, sales had doubled and Snyder had paid back the $1.8 million loan. He then picked up the Dr Pepper bottling rights to South Texas, acquiring a Beeville-based Coke bottler with a six-county territory along with Dr Pepper rights. Snyder and his then-wife also bought up company stock from aunts and uncles, giving the couple a solid equity position. In 1987, the sheep rancher’s son negotiated the sale of American Bottling to Dallas’ Hoffman family for about $55 million, some $23 million of which Snyder shared with his wife.
In his early 20s, after taking over his grandfather-in-law's American Bottling Co.
What’s remarkable is not Snyder’s dogged pursuit of a goal, or his ability to size up the assets and future prospects of a company in mid-collapse, but a frankness that nearly embarrasses the listener. He is more than willing to boast of turnaround coups, and he has done about 100 restructuring assignments, working two or three at a time. The retelling would make him look pompous and self-serving if he didn’t seamlessly segue with startling candor into an accounting of personal setbacks, themselves impressive in scale and cost.
“I was 27 years old and had all this money,” he said of his immediate post-Coca Cola period. “I thought I was invincible. I was the smartest guy you ever met. So I immediately went out and bought a Ferrari 328 GTS and a 10-seater Piper Cheyenne 3 Turboprop.”
With his proceeds from the company sale, he acquired nine companies to form the Snyder Co., which overnight became one of the nation’s biggest suppliers to convenience stores of fresh sandwiches and other edibles, with more than 300 trucks and a couple of hundred million in sales. But less than two years after setting out, three of his biggest accounts—Circle K, Stop-N-Go, and 7-Eleven’s then-corporate parent Southland—filed for bankruptcy protection. “And I went down with them,” he says.
“Everything craters in 1989,” Snyder says over coffee at his Southlake home. “Five of my nine companies file bankruptcy, my wife leaves me. ... I don’t blame her. I was going around with my hair on fire. You wouldn’t want to be married to me either. You can live with a jerk as long as he is rich, but you’re not going to live with a poor jerk. So she walks….
“At 29, I’m divorced, I’m broke, and one of the companies owed $500,000 in 941 payroll taxes, which are non-dischargeable and for which I am personally liable,” Snyder goes on. “The IRS hounded me for seven years until I finally paid them off.” In retrospect, he draws some positive lessons from the lowest point in his life. “Failure when you’re 29 is a good thing,” Snyder insists. “You start to listen instead of talk. Getting your ass kicked at that age is also good because you have time to recover from it. The biggest loss was not my money, but my marriage.”
His ex-wife and two daughters were supported with proceeds from a noncompete agreement when he sold the bottling company, but Snyder needed to find a livelihood. While contemplating his next move from a $525-a-month rental house on Dallas’ Leahy Drive, Snyder read an article about Buccino & Associates, a turnaround firm, which was then dealing with a bankrupt soft-drink company. “I know bottling and I know bankruptcies,” he recalls telling himself. And, having spent so much time in bankruptcy court, he became familiar with the “shadow” industry of turnaround consultants and attorneys.
Snyder approached Buccino and was hired. His first assignment was not the bottler but the Chapter 11 reorganization of the Hans Mueller Sausage Co. After three years at the firm’s Dallas office, Snyder moved to another restructuring firm, now X Roads Solutions Group, before being hired to resuscitate Reliant Building Products, a Bass family enterprise. In 2001 he started what became CRG Partners, serving today as a managing partner and sitting on its executive committee.
Snyder’s trade is capitalism at its most ruthless and basic, cutting away dead or unproductive tissue like a skilled surgeon to leave a viable entity with a strategic reason for being. Or simply pronouncing the patient doomed. “Sometimes companies need to just die,” he explains. “And the quicker you kill them ... the more value you can get out of the assets. That’s not a failure. I don’t think a good liquidation is a failure. A bigger failure is trying to do a turnaround but waste the assets and there’s not enough for the creditors.”
Like the character played by George Clooney in the 2009 film Up in the Air, Snyder is frequently away from home—and depends on his enhanced American Airlines status afforded by buying $25,000 chunks of airfare at a time. Also like Clooney’s role in the movie, Snyder has had to lay off hundreds, sometimes thousands, of workers.
Unlike Clooney’s chronic bachelor Ryan Bingham, however, Snyder has a very full family life. He married an Aggie and former bankruptcy-firm paralegal named Janet Wilson, later adopting two Russian siblings when the couple thought they couldn’t conceive. They were then surprised with news within a year that Janet would give birth to twin boys, which Snyder ascribes to God’s sense of humor.
Also unlike Clooney’s Bingham character, Snyder doesn’t perform a company’s dirty work and then scram. More often than not he has to figure out if the enterprise is worth saving, and with which remaining parts. Sometimes it can get ugly.
William Snyder's sheep-rancher father, William K. Snyder.
In 1991, for example, Snyder laid out the unvarnished truth to the Teamsters at an auto parts maker in Delphos, Ohio, that was losing millions of dollars. If the work rules weren’t changed, he told them, the plant would close and some 600 union members would be out of work. The facility would stay open, he promised, if the union leaders could fix it.
“And they did,” Snyder says. “They downsized it 300 employees themselves. They turned it around. And we’re making a little bit of money.” Even so Snyder ended up selling the bankrupt parent company to another manufacturer, which decided to close the by-then-profitable Ohio plant anyway and shift production to low-wage Mexico.
After informing employees of their imminent mass dismissal, Snyder was jumped by two foremen as he left the building. “They just beat the holy hell out of me, just beat me to a pulp,” he recalls. “One of the secretaries pulled them off of me, saying, ‘You’re going to kill him, you’re going to kill him!’ My nose was bleeding, my lip was torn up, my eyes were black. When I got to my rental car it was demolished. … I can understand their frustration. They did what we agreed.”
These days Snyder never fires workers on his own, and he never addresses a group of workers without security present. He refused to meet with terminated workers at a Pilgrim’s Pride plant in Douglas, Ga., in 2009, after receiving threats and seeing a blog post headlined “Kill Bill” on the Internet.
Pilgrim’s bankruptcy and sale to the Brazilian beef giant JBS S.A., owner of the Swift brand in the United States, was perhaps Snyder’s biggest achievement. According to Snyder’s CRG colleague Scott Avila, it also showed Snyder at his best. The remarkable outcome saw creditors paid 100 percent and left shareholders with $500 million in equity—rare in such bankruptcies—as JBS agreed to limit itself to 64 percent of stock to gain control.
Pilgrim didn’t collapse because of soaring corn prices, low chicken prices, and untimely debt from acquiring a Georgia-based firm, Gold Kist, as was widely reported. Tyson and Sanderson were also heavily leveraged and dealt with the same market conditions without collapsing, Snyder notes. Instead, he says, the culprit was howlingly bad management.
Snyder says he confronted company founder Bo Pilgrim—who’d seen the value of his stock drop from $1 billion to $250 million—to tell him that his handpicked management had to go, starting with the problematic CEO. The founder agreed to accept Snyder’s advice and sacked the chief executive, replacing him with a respected industry leader. “It took a year of my life,” Snyder says, adding that being a turnaround specialist has personal costs.
Typically, Snyder says, the field draws “dysfunctional people” who can make rapid-fire decisions and leap from industry to industry. He figures that three out of five colleagues have attention deficit disorder.
As for himself? “I love my job,” Snyder says.
Then he’s off in his Honda Pilot to his next appointment—giving yet another bankruptcy deposition, of course.