Business Bankruptcy Attorney Los Angeles
Alternatives to Filing Business Bankruptcy
The tightening of the credit markets in recent years has made it difficult for businesses to fund operations with the usual capital they had access to. Needless to say, how the credit markets operate can have a direct impact on obtaining necessary cash flow for a business of any size. When you combine a lack of liquidity in the credit markets with declining revenues, you can see why businesses turn to bankruptcy reorganization. Once liquidity becomes a problem, many business owners don’t have the time or knowledge of how to keep the business solvent – they are too busy trying to stay afloat in a tough economy. What are the financial alternatives and who should you turn to for advice?
The options for a financially distressed business extend beyond filing for bankruptcy. Many of the bankruptcy alternatives can be accomplished outside the bankruptcy courts. If your business cash flow is being squeezed and creditors are closing in, it’s time to speak with a qualified business attorney who can advise you on the alternatives to business bankruptcy that are available.Negotiating A Workout Plan With Creditors
One advantage of negotiating a workout plan with your creditors is that your business can continue to operate without bankruptcy court supervision. Is an alternative repayment plan possible, do you need an infusion of capital, or should you seek replacement financing? Once it has been determined that your business is sustainable on a going forward basis, a restructuring plan should be developed before any attempt to negotiate with creditors. This plan may include historical financials and future projections for cash flow, P&L and the balance sheet. Having this information allows you and your creditors to make an informed decision about the structure of a potential workout plan.
Negotiating a workout plan is best left to a professional who can remain a neutral third party in the face of what may be disgruntled creditors. By retaining an experienced business bankruptcy attorney, you send a message to creditors that bankruptcy is a possibility for your business. For some creditors, this information may spur them to give your workout plan serious consideration.
The process of producing a restructuring plan and presenting it to creditors can be difficult and time-consuming. Because the success of any workout plan depends on each creditor’s agreement, careful consultation coupled with financial creativity can prevent holdouts
A knowledgeable business lawyer who can advise you throughout the process should pursue an out-of-court workout plan on your behalf.
Assignment For Benefit Of Creditors
If all avenues of restructuring have been exhausted and a liquidation of your business becomes necessary, an alternative to a Chapter 7 business bankruptcy filing is an assignment for benefit of creditors, which is overseen by the state courts. It may be the case that your business wants to sell its assets but the sales price is not sufficient to repay all of your debts. Selling the assets through an assignment for benefit of creditors may present a more efficient alternative to selling the assets in a bankruptcy case. In this process, an independent assignee is selected and acts as a fiduciary to the creditors. The assignee is then responsible for liquidating the business assets at maximum value.
Alternatives to bankruptcy should be carefully considered with the advice of an experienced business bankruptcy lawyer. Consulting with a seasoned restructuring professional can make the difference between success or failure of the bankruptcy alternative you choose. Give us a call today to discuss the options you have to move your business forward.
