As the coronavirus shifts the way the world works, businesses should take this break in normal operating procedure to re-evaluate their finances. If your business is struggling, OFP recommends the following financial triage:
- Save as much cash as possible. There are many more options both prior to and after declaring bankruptcy when there is cash on hand and the business is netting some profit each month after employees, rent, and other fixed expenses have been paid. There are very few, if any, options when cash is missing and a business can’t make payroll. Business bankruptcy filings have a number of expenses that need to be paid up front to even get a chapter 11 case started.
- Prioritize your payments. Pay your employees, your utilities, and your secured debt or lease payments first (e,. the things you need to keep your business going). Deal with your other debts (your unsecured creditors) later if that’s what’s needed to make sure the keep-the-doors open expenses are met and you have some cash reserves saved in the event you need to file.
- Consider working with a financial adviser. If you identify your financial struggles early on, a financial advisor may be able to help you prioritize payments and optimize cash flow. We often work closely with financial advisors, both before and during our cases, to make sure a bankruptcy filing is right for the client and to develop a strategy to best use bankruptcy to help the client pursue their business objectives.
Use this down time to take stock of your financial position. The attorneys at Odin Feldman Pittleman are available to assist you before or after your business enters into bankruptcy. Contact Brad Jones at 703-218-2176 or by email at [email protected].
Disclaimer: The information contained herein is provided for informational purposes only and should not be construed as legal advice on any subject matter. This information contained herein is not provided in the course of an attorney-client relationship and is not intended to constitute legal advice. Any information contained in this article is not intended to be a substitute for legal counsel. No one should act or refrain from acting on the basis of any content included in this article but should instead seek the appropriate legal advice on the particular facts and circumstances at issue from a properly licensed attorney. The author expressly disclaims all liability in respect to actions taken or not taken based on any of the contents of this article. This article contains general information and may not reflect current legal developments.