Posts Tagged ‘business workouts’
Bankruptcy Prevention Options: Is a Workout Right for Your Business?
February 5th, 2010 | 
Author: Do money woes mean your company has to file for bankruptcy? Not necessarily: corporate bankruptcy and a business workout are generally both options that can help your business resolve your insolvency issues.
Debating a bankruptcy filing can be one of the hardest decisions a business owner will ever make. With mounting debts, it can be hard to see how your company will ever overcome its financial woes. But there are almost always at least two options when your company is bordering on insolvency: corporate bankruptcy and a business workout.
Business Workouts
This bankruptcy prevention strategy can help you settle with creditors outside of the courtroom. These non-bankruptcy solutions involve working with your creditors to resolve your debts and enable the business to continue in operation. Including options to renegotiate and reorganize debt, business workouts can help your business regain liquidity without a costly, drawn-out bankruptcy filing.
If you’re wondering why creditors would be willing to renegotiate debt, the answer is simple: money. Bankruptcy proceedings ensure that many of your creditors get some repayment of the debt owed, but most creditors generally take a major hit. With a workout, they’ll likely receive payment on a greater portion of your debt. So instead of being unenthusiastic about renegotiating your company’s debts, your creditors are likely to be eager to participate in debt restructuring. It’s their best bet for having their debts fully satisfied!
Corporate Bankruptcy
However, if your creditors refuse to compromise and your debts have become completely unmanageable, corporate bankruptcy may be your only option. Depending on the organization and structure of your business, there are several options available for business bankruptcy. Filing a Chapter 7 bankruptcy results in the liquidation of your company, selling off assets to satisfy your debts. Filing a Chapter 11 bankruptcy involves restructuring your business to regain profitability and settle with creditors. Some assets may be sold off during this process, but the company will not be liquidated. To determine the most appropriate type of bankruptcy filing for your business and your particular financial situation, you’ll want to consult an experienced bankruptcy attorney. Keep in mind that for small business owners, a business bankruptcy will affect your personal finances, so it’s best to avoid it if at all possible.
With debts piling up, it can be hard to know if or when to file for bankruptcy protection—that’s why you need to call Ganje Law now. We can offer you expert advice on what’s right for your business, so don’t wait! Contact us today.
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Corporate Bankruptcy Is NOT the Only Solution for Your Struggling Business: Explore Bankruptcy Alternatives to Satisfy Your Corporate Debts
The first question most business owners ask about workouts and restructuring is why will my creditors want to renegotiate debt? The simple answer is that bankruptcy often means creditors see little-to-no repayment of their debts. That means, in most cases, your creditors actually want to help your company avoid bankruptcy. Instead of being unenthusiastic about a workout, creditors will likely be eager to pursue debt restructuring. They know it’s the best option for having part or all of their debt repaid, and they’ll work with you to develop a successful financial workout.
When considering filing for bankruptcy, remember that bankruptcy is almost always more invasive than a workout. On top of being less expensive, non-judicial solutions like workouts and turnarounds have the option of being more private. Bankruptcy protection involves and astounding number of financial disclosures, schedules of assets and liabilities, and in-depth reports, exposing all your financial records to the courts and ultimately, the public.
Keep in mind that every corporate bankruptcy situation is different, so you should consult an experienced bankruptcy lawyer for advice. He or she can guide you through the options available for your specific business and help you decide on appropriate course of action. In these chaotic economic times, remember that your business is not alone: a bankruptcy attorney can help! Call your local bankruptcy prevention specialist today.
