Saving Financially Troubled Businesses (COVID-19 Alert)
May 20, 2020
The U.S. Chamber of Commerce predicts that 40% of the nation’s 30 million small businesses could close permanently in the next six months. Shelter in place orders are the rule and not the exception. Even though some states have begun re-opening on a small scale, pre-COVID-19 business as usual is still a long a way off. The damage to small businesses will be unprecedented.
Are you worried that your business will be one of the statistics? It may not have to be.
YOUR POST-PANDEMIC BUSINESS PLAN
The first thing you need to decide is whether you have the desire and the stamina to do what it takes to get your business back on its feet.
The second thing is to build a business plan of what your business will look like post-pandemic. What will your revenues and debts look like? If you can pass these first two thresholds, there is hope for your post-pandemic business.
HOW RESTRUCTURING CAN HELP
If you believe that your business can survive, restructuring may be your best survival tool. In the past, reorganizations using Chapter 11 of the Bankruptcy Code were too expensive and time consuming for small businesses. That has changed.
This year Sub-Chapter V became available. Sub-Chapter V is a new section of Chapter 11. It allows businesses with less than $2.75 million in debt to use a streamlined and less expensive format to achieve a fresh financial start.
Unlike Chapter 11, Sub-Chapter V allows the court to force creditors to accept a plan of reorganization; even if creditors object. The business owners can continue to operate the business. And, in some cases, a lien on real estate that was used as collateral for a business loan can be cancelled.
NOW IS THE TIME TO CONSULT A PROFESSIONAL
If restructuring sounds like a viable way to save what you have worked to grow and build, it isn’t too early to start. The bankruptcy and restructuring attorneys at Golan Christie Taglia LLP can help you evaluate your business and determine if it is a good candidate for a reorganization.
For more information or to discuss your particular situation, you can contact:
Beverly A. Berneman (312.696.1221),
Robert R. Benjamin (312.696.1220), or
Barbara L. Yong (312.696.2034)