Business Bankruptcy | Helpful Information
Filing for business bankruptcy will devastate your troubled firm. I know that many business leaders think that a Chapter 11 bankruptcy filing will solve all of their problems, but they just don’t understand.
Let’s compare the advantages and disadvantages to Chapter 11 business bankruptcy:
Advantages
- You get an automatic stay from having to pay creditors as soon as you file your business bankruptcy.
- You can accept and reject contracts.
- You can propose a plan to reorganize your balance sheet.
- In short, Chapter 11 business bankruptcy buys you some time
Here are the disadvantages of Chapter 11 business bankruptcy:
- You have to pay all attorney fees for your firm and for your creditors. This can easily be $100,000+ ($1,000,000 is not unheard-of.)
- The judge has complete oversight of your firm. You run the day-to-day operations, but the judge makes all the big decisions.
- Since most firms cannot afford the attorney and court fees for the bankruptcy out of their current cash flow, the judge will order them liquidated. Therefore, a business bankruptcy filing means a death sentence for most firms.
- The business bankruptcy judge and the appointed trustee examine the actions of the firm’s leadership before and during the bankruptcy. This can lead to civil penalties and possibly arrest and imprisonment.
We could go on about the disadvantages of business bankruptcy, but you
should see that a filing should be your last resort.
So what to do you do? Our advice is to turnaround your
firm using vendor stretching, debt restructuring, cash management and
dramatic downsizing. If and only if these efforts fail, you file Chapter
11.
To learn how to fix your firm and avoid a filing, you should read The Insider Secrets to Saving Your Business: The Step-by-Step Turnaround Guide. This is an excellent training manual that shows you how to turnaround your firm in a short amount of time.
This guide will show you many business bankruptcy alternatives, and you should read this cover to cover before starting your turnaround. If you do this, you will avoid the need to put yourself at the mercy of the court.
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