Business Workouts and Bankruptcy

Business Restructuring Debt Choices

image of store closing signThe Great Recession continues to impose high financial hurdles for today’s businesses, including increases in the cost of goods sold, slower paying customers, and an increase in uncollectible accounts receivable. Over the same period of time, credit markets have tightened, making a traditional refinancing of business debt difficult to accomplish. Business debt workouts and Chapter 11 or 13 bankruptcy cases are the most commonly used solutions for unsustainable financial strain on a business.

Business Workouts

A small or mid-sized business can attempt to refinance its debt in a collective negotiation involving all of the business’s creditors agreeing to a payment plan that is both affordable to the business and palatable to the creditors. Workouts typically involve (1) reductions in interest rates paid to secured creditors, (2) extension of maturity dates on business debts, (3) adding accrued late payments and associated fees to the end of the debt, (4) installment plans on trade debt, and (5) fractional payments of trade debt. Business workouts are available through a Milwaukee bankruptcy attorney with Hanson & Payne, LLC.

Business Bankruptcy

When workout negotiations fail to achieve an affordable repayment plan, a Chapter 11 or 13 bankruptcy case may be an option to force a creditor to accept a modified payment arrangement that the creditor would not agree to voluntarily. Business bankruptcy cases provide an added option that workouts typically do not; a reduction in the principal amount of a secured debt. Successful business bankruptcy cases require coordinated planning by a skilled bankruptcy attorney prior to the bankruptcy filing. The business bankruptcy attorneys at Hanson & Payne, LLC have represented many financially troubled businesses through the workout and bankruptcy processes and have experience across a broad array of business fields.

Summary

Dealing with financial strain on your company is not a matter of simply applying common sense to a problem. In most cases, many of the best options available for relieving a company’s financial stress can be lost in the initial stages of negotiations with creditors, the most aggressive of which will typically succeed in seizing financial control from the business and using that control to direct all available resources of the company to that creditor. Successful business workouts and bankruptcies are the product of good planning with the assistance of a skilled bankruptcy lawyer. The Milwaukee bankruptcy attorneys at Hanson & Payne, LLC, have a reputation throughout Wisconsin for highly coordinated and successful business workouts and bankruptcies.