The business bankruptcy filings recently have been rather flat across the country and have not gone back up to the high levels they were in late 2020 and the beginning of 2021. It appears a lot of businesses have either shut down for good or are managing to struggle through. These businesses have avoided bankruptcy filing and having to shut their doors. Depending on the industry, it could be Paycheck Protection Program (PPP) money that has helped or one of the other government programs that have been available to help many businesses.
However, it appears that at some point, the guillotine will fall and start cutting again. I think there is going to be a period where a number of businesses will need help to try to work their way out of financial trouble.
Should a Business on the Verge of Filing Bankruptcy Contact an Experienced Attorney Immediately or Should They Wait?
At the first signs that the cash on hand isn’t going to meet expenses, business owners should talk to a lawyer. Don’t start throwing personal funds that you might need to survive, or to retire, into the business. Instead, go talk to someone. There may be the possibility to negotiate on the front end, with merely the threat of bankruptcy, that could allow that client to save thousands of dollars and avoid bankruptcy altogether.
Recently I’ve helped two businesses negotiate debt relief. In one case, we were able to negotiate with the primary creditor to reach a resolution without bankruptcy. The negotiation saved the client $10,000 to $20,000. The other case is ongoing, but we are hopeful, through negotiation, the lender or landlord will realize that there is a limitation on what they will recover in a bankruptcy.
If you wait until the last minute, where you have no other option but bankruptcy, these negotiations may not be available. You could spend $10,000 to $20,000 to ultimately reach a resolution that you could have reached earlier without having to expend those dollars.
There are several options or resolution processes out there. You may be able to
- negotiate the debt,
- determine a forbearance agreement with the lender is preferable, or
- decide that the business doesn’t need to be saved and it is best to shut the doors.
Until you talk to an experienced bankruptcy attorney, you likely won’t discover a solution. You need a knowledgeable attorney to help you figure out what is or isn’t available and what would or wouldn’t work.
For more information on Businesses on the Verge of Filing Bankruptcy, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (205) 506-3354 today.