Nobody opens a business hoping to fail. No entrepreneur wakes up, pours themselves a coffee, and says to themselves, “today is the day I take my company into bankruptcy.” It’s never that simple. Most companies fail very slowly, and they often don’t know what is going to happen until it is almost too late.
But when debts keep piling up, everything starts to get complicated. Accounts Payable stays past due. Accounts Receivable doesn’t get paid back. Supplies on the shelves go stale. The phone rings, and you fear that the call might be the call that your company shuts down. This is no life you want to live. One day, you’ll wake up and finally realize that if you want to live and thrive, you’re going to have to take a stand. Your company’s financial life is in danger and it’s up to you to save it.
A business restructuring bankruptcy can save your company. You can breathe new life into a company that’s on its deathbed. It’s a type of bankruptcy that’s designed to help businesses in need of drastic measures take the amount of action that they need to get back on track. It can also halt creditors.
Remaining Committed
The first thing you need to do is ask yourself if you still want your company to survive. Are you determined to make a go of it, and are you willing to do the work to see that company through? The only way you can survive and make a go of it through a business restructuring bankruptcy is by remaining committed to your company. This process is challenging, and it’s going to take some time. You’re going to need to make sacrifices. If you’re unsure if you want your company to survive, you might need to explore other options.
If your heart isn’t in it, if you don’t see the future for your company anymore, then bankruptcy might not be the right way to go. Ask an attorney about simply dissolving. On the other hand, if you’re committed to making this work, if you have that drive within you, and you want the chance to make a go of it, then a business restructuring bankruptcy is going to be just what you need.
The first warning sign is borrowing. Before taking on debt, can you service the new loan on top of the other loans you already have? Will you be able to pay the bill, or is this another “We’ll worry about paying it when we get it” kind of loan? If so, you’re setting yourself up for a huge cash-flow problem in the future. If you can see that this loan is more money and therefore more debt you have to worry about, it’s a good time to stop. More borrowing invites personal negligence claims.
Second, watch how your creditors are behaving. Have your creditors become unforgiving, aggressive? Do they complain about your business practices, or do they keep pushing you for more? If so, that is another warning sign that something is wrong. They’re sensitive to trouble in business, and they know a crisis when they see one. If they’ve started calling your customers, that’s even more of a red flag. It’s a clear indication that your business is in trouble. If they have, the best thing to do is contact an attorney right away.
Third, look hard at payroll. Has it started to look shaky? If you’re late paying your employees or you are not able to pay them consistently, it’s a sure sign you are in trouble. If you can’t pay your employees, you can’t pay the rest of your bills. Payroll taxes are worse: the government can hold you personally accountable for those, leading to serious liability. The key is to anticipate the problem: if you see it coming, take action before it’s too late.
Fourth: every asset you own has value. How much of that value is tied up in collateral? Is it too much? Can you afford to lose this valuable asset? If you can’t afford to lose the asset, and you’ve tied it up in collateral, then you need to make some changes. Debts above assets? Income pledged? Then you are teetering on the brink of bankruptcy. When you find yourself in this situation, the first thing to do is halt the sinking of your personal assets. You want to save them, and you want to save your personal credit rating. Consult a bankruptcy attorney about your current situation to see if that is the best course of action.
Fifth, look at your own paycheck. Do you take one? If not, that’s a clear sign that something is wrong. Yes, this happens often in small business ventures, but it’s not something you want to keep doing. If you’re paying yourself less than you should be, or you haven’t paid yourself in a while, then your business is a fire burning out of control. You need to look into taking action to save your business ASAP.
Would lighter debt payments restore profit? Can you think of a way to turn your company around? If you can’t see the solution yet, it is important to still be able to see an end result: can you look into the future and see how you can make your business profitable? Can you visualize the path that will lead you there? If not, your business is probably not a good bet. Dissolving it may be smarter. If you feel that you can save your business, that you can make it work again, then you need to speak with an attorney about bankruptcy.
Get an Attorney on Board
If you’ve decided you are going to file for bankruptcy, then the next thing to do is get an attorney on board to help you. Choose one experienced in business bankruptcy. Be frank with them about your goals: you want to keep your company alive, but you also want to preserve your assets. A good attorney knows that in business restructuring bankruptcy, the point of the show is not just to stop the bleeding. The point is to stop the bleeding so you can restart and recover.
Barring emergencies, preparation takes 3–6 weeks. You’re going to need to gather up financial information and documents that are relevant to the proceedings. The more information you can gather before the filing, the better. Make sure to list all of your assets, determine their value, and find out about what type of security you have placed on them. Include income sources and tax returns. Work closely with your attorney so that you can get the paperwork submitted as quickly as possible. Be honest with your attorney. This is the time to have an honest, frank conversation about your business, your assets, and where your business stands today. The last thing you want is for your bankruptcy attorney to miss some important piece of information that will really cost you in the long run.
If hostile creditors attack meanwhile, use the legal option to push them off. Consult your attorney for the best method. This is important: when it comes to the filing itself, the last thing you want is for your creditors to put you through any hassle. The sooner you can have the filing done, the sooner you can start saving your company.
File the petition, pay the fees. Almost overnight, the tide of creditors turns. They will be forced to halt and begin looking at their options. They must leave your customers alone. They will have to wait. However, this means you can start to focus your attention on your company, on saving the company.
Worried? Don’t wait. Start thinking about what you need to do to save your business. Then, take action. If it’s coming this way, you want to act before you’re in the ground. The situation isn’t going to get any easier; it’s only going to get worse. The time to get ahead of it is now. This is a complicated process, and you are going to need an attorney who knows what they are doing. Pick a local business bankruptcy specialist. Speak to one today.
