Business Bankruptcy – Don’t Do It!
Don’t do it! It’s a trick … unless you know exactly what to expect and ALL related costs and time. Why you might contemplate bankruptcy and what you expect to get by filing one, can easily be a LOT different than what you actually end up with.
There are various types of bankruptcy filings, but the common two for a business are Chapter 7 and Chapter 11. The newer one on the scene is a Subchapter 5 and falls under an 11. Chapter 7 liquidates and closes the business, while Chapter 11 attempts to reorganize the business. However, the greater amount of Chapter 11 filings end up in a Chapter 7 liquidation. The cost, the work, and the accounting involved in an 11 is overbearing, especially for a small business. Not to mention, unless you find out what caused the business to amass excessive debt, there is no way to move forward and meet all your operating expenses, which is a requirement in a Chapter 11 and a Subchapter 5.
The nasty truth is the vast majority of bankruptcy filings end up closing the business, selling off assets and triggering personal guarantees that will linger long after the business is gone.
Are there alternatives? So glad you asked! There are numerous alternatives in fact. Ways to settle debt, reduce debt, eliminate debt AND all while making the company profitable. Can you do this yourself? With over 40 years of doing just this professionally, I would not suggest it. In the many times I have seen well intentioned business owners attempt to take this on, I have seen many make mistakes that made the situation much worse.
The overwhelming response we hear is, “but I can’t afford to hire someone to do this”. In fact, you can! If the right provider can make the company cash flow, or even qualify for lending, you start making money right away. In the great number of instances, this profit is many times the cost to create the profit. In other words, you spend $1 and make $10. That’s not brain surgery. Why don’t entrepreneurs do this more often? Simply because they become fixated on getting money via a loan, convince themselves that they cannot afford help, and pay no attention to fixing the true problems that is causing the losses. I believe that is referred to as “A Recipe for Disaster”.
Our experience creates cash flow within WEEKS. Yes, you have to bite the bullet to get started, but a deer in the headlights is likely to be run over.
Now You Know!
