Business Bankruptcy: When you should file and when you shouldn’t
Business Bankruptcy Timings
Business bankruptcy is risky for any company in trouble. Business bankruptcy is a way to get protection from your creditors, so it seems to be a logical strategy to follow if your firm is in trouble.
However, what you probably don’t know is the attorney fees are high. So high that often the bankruptcy judge will order your firm liquidated to pay the fees.
To give you an idea of the size of these fees, I know of a $23 million a year firm that recently went through bankruptcy and it cost the firm over $1 million. If your firm does not have much cash, then you should avoid bankruptcy if your want your firm to survive.
Here’s when you SHOULD NOT take business bankruptcy
- When you still have some cash left
- When you not yet tried to restructure your debt yourself
- When you have not downsized
- When you have not stretched vendors
- When you have not collected you receivables
- When you have not sold your receivables
- When you have not put in place strong cash and accounting controls
When you SHOULD take business bankruptcy
If you have done all the items above and you are out of cash, then you should
file business bankruptcy because it is your only remaining choice. You have
given it your best shot, but not every company can be saved.
In my experience, it won’t be necessary to file. Decisive and well-thought out actions by the firm’s executive is all that is necessary to fix most troubled firms.
To learn how to fix your firm and avoid business bankruptcy, you should get a copy of the turnaround bible: The Insider Secrets to Saving Your Business by Dan Betts. In this guide, you will learn what actions you need to prevent a filing and save your firm. You will learn about debt restructuring and negotiation, turnaround planning, financing for troubled firms and much more.
You can find out more about this guide and business bankruptcy alternatives at the Turnaround Central web site http://www.turnaroundcentral.com
(Disclaimer: The above is general advice. You should consult an attorney about specific choices for your specific circumstances.)
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