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 brad.jones@ofplaw.com.