Saving the Troubled Business
You own a small business and it is struggling. Can you save it and your investment? There are several versions of restructuring and reorganization under both Federal and state laws, and with careful planning you can: stop collection activity (including foreclosures and other lawsuits), force lenders to reduce principal and alter terms of loans, and cancel leases and contracts. Even tax debt can be eliminated or reduced in reorganization proceedings. Tax sales and IRS levies are stayed, and tax obligations may be repaid over extended periods. Distressed businesses can be given a year or more to catch their breath. Competent business restructuring counsel looks at the financial history and “worst case” projections and formulates a customized exit strategy using the latest developments in the law. This exit plan often includes a dividend…typically a small percentage of the total owed…to unsecured creditors. While creditors have the right to vote on some plans, careful drafting can defuse the power they wield. Business owners often make the mistake of waiting too long to explore their reorganization options. Prospects can be enhanced by discussing the options with competent counsel at the first sign of distress. The key is finding experienced counsel: Ask whether they are board certified in Business Bankruptcy Law, how many cases they have successfully confirmed, and ask to see an explicit exit strategy with real projections. Ask for a recommendations from prior clients. Your business salvation may depend on your selection of counsel with the right credentials.