Running a Business After its Principal Dies

Peter Lykos was a vibrant and engaged remodeling professional on the cusp of taking his business, Cutting Edge Building Corp., Naples, Fla., to a higher level when a brain aneurysm suddenly and shockingly took his life last October. He was 38 years old.Lykos was not new to the business. His father Sonny Lykos launched The Lykos Group Inc. 14 years ago. His brother Tom and he worked alongside each other at the business after Sonny retired until Peter decided to strike out on his own a few years ago. At the time of his death, his company was doing 40 to 50 jobs per year and had four full-time employees.

The following is a story about how Peter’s brother Tom took the reins of Cutting Edge in order to honor his brother’s commitment to complete 13 projects and to tie up his affairs with employees and vendors. Qualified Remodeler wishes to thank Tom Lykos and the Lykos family for sharing this story in order to help other remodelers plan contingencies for their businesses.

QR: What steps were taken with Peter’s business after he passed away?

Tom Lykos: He had five employees that — for all intents and purposes — no longer had a job. And he had, at the time, 13 clients that no longer had a contractor. My brother’s subcontractors and material vendors had no direction anymore. They did not know how they were going to get paid for the work that had been done. So the first steps that I took was to contact the state licensing department to take over my brother’s business.

Next, I had my brother’s office manager contact all of his clients to let them know what happened. She also told them I would be stepping in with three options. The first was to finish their job in my brother’s company’s name. Another was to transition them to another contractor. And the third was that I would finish their job under my company’s name.

QR: How did his clients react?

Lykos: The reactions ran the gamut. My brother was the type of person who — and this might sound corny — really touched everybody that he came into contact with. In dealing with his clients and vendors, some were so upset by his death that I had to wait a couple of weeks to talk about their job. There were other people who could not care less that my brother had died; all they cared about was getting their job done. It did not matter who was going to do it or how it was going to get done. So I had to kind of make my way through that minefield.

My brother’s employees had a really good handle on a few jobs and we were able to get those cleaned up pretty quickly. About a third of those jobs fell into that category. Another third of his clients were very cooperative. Whether we finished the job, or somebody else did, they were very understanding about the effect on our family. They were appreciative of my attention to help them get their job done. I helped them track down a new contractor. I helped special order new material. We transferred permits over. Whatever we needed to do, about a third of them, we worked through a process to get them finished out.

Then there was a third of his clients that took advantage of my brother’s passing. Right now there is one client that I have a lean filed against. It is a drawn-out mess. They don’t want to pay their bill. Because he died, he did not finish the job. So they are suing for breach of contract.

Then there was another of his clients who, the day that we called to let her know — this is two days after he died — she sent me a fax with all the work that should be done on the contract, plus a list of all the extra work that she wanted done. When we gave her a bill three weeks later when we finished her job, she told me to call her attorney and that we were not going to get paid.

I helped another gentleman find a new contractor to get his job done. I personally chased down all the special-ordered materials that my brother had ordered, got them all to my office, met his new contractor at my office and gave him all the materials. And take into consideration that this is the end of the year, and the holidays are coming up. My parents are still grieving over their son. I’ve got my own children grieving over the loss of their uncle. I am trying to deal with all of that. Then this gentleman, who I helped get his job done, was upset because he felt that the deposit he gave my brother was more money than the actual work that got done on the job, so he sued me for all the money that he gave my brother. So this last third of his clients took advantage of my brother’s passing. They saw it as an opportunity to get work done for free.

QR: Looking back, are there things that you would have done differently?

Lykos: I would have taken the advice of my brother’s attorney and that was to notify everyone that no work would be done until I was able to ascertain the financial condition of each job. I tried to keep the jobs going and this created problems for me. So the first thing I should have done is stop all the jobs.

In hindsight, I should have never gotten involved. It sounds horrible. But I should have never been involved in his business and his personal affairs. I should have let the attorneys take over and handle everything. The best thing I could have done was not get involved, because my employees suffered, my vendors suffered and the people who I was trying to help had no appreciation whatsoever.

There were clients that were scheduled to come down [to vacation in Naples] for Thanksgiving, so there was pressure to get their jobs completed or to get to a certain stage. Under those kinds of pressures, I made decisions based on my brother’s original production schedule. I did not know who his vendors were. I had no relationship with them. So I was trying to keep promises my brother made and I did not even know who the parties were. So not only would I have gotten a better understanding of the financials of the job before I proceeded, but I would have gotten a better understanding of the clients and the vendors involved.

QR: Were any of his clients appreciative?

Lykos: Of the 13, there were two or three that actually said it. And I think there were others that there was more relief than appreciation. They probably had no idea of what was going to happen. Because of their limited knowledge of what to do in a situation like that, I think the fact that it got done, however it got done, made it more of a relief than gratitude.

QR: Did you make changes at your company as a result of this experience?

Lykos: My production manager has been with me for 10 years. Informally, I consider him to be my partner. We made allowances for him to be able to run the business in the event of my death; my attorney has been counseled to immediately appoint him the qualifier for the business. Qualifier is a legal name for a person who is responsible for the business.

When my brother passed away, he still had payroll to meet. He still had vendors to pay. And I had to fund his business for about two or three weeks until I was able to get a handle on his finances. We have set up some life insurance policies so that if something happens to me, the company owns a policy that will create some capital and there won’t be a financial strain on the business. They can make the payroll, meet with clients and there won’t be the pressure of production and finance along with the personal strain.

QR: Why did you step in?

Lykos: My goal from the beginning was to make sure that Peter’s customers jobs got done and to make sure that all of his vendors got paid. I know that he would want people to say that he ran his business honorably. Everybody got paid who was owed money. Everybody got their jobs done. He honored all of his promises. And that was my intention.

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