Some Questions To Ask:
- Is the business incorporated? If it is incorporated have you or anyone else made personal guarantees or pledged personal assets as collateral?
- Is the business losing money even if there were not long term debts like equipment loans or past due suppliers?
- Is the business falling behind on "trust fund" payments, like employee withholding or sales tax obligations?
Negotiation/Workouts: Your creditors do not generally want to put you out of business. If the business closes they will likely not get paid. Negotiating a restructure of long term loans and settlement of open accounts for less than the full balance can sometimes work. This can be done either on your own or with the assistance of an attorney. Our firm has extensive experience in negotiating with large national banks as well as local lenders in negotiation of forbearance, reduction of balances and other modification of loan agreements without having to resort to bankruptcy.
Chapter 11: If the business can make it on a monthly cashflow basis but long term debts, old suppliers or lawsuits are dragging the business down a Chapter 11 reorganization may allow the business time to regroup and regain control of the business. Chapter 11 is a complex process and it is our advice that you consult attorneys that have handled these cases before. Our firm has handled some of the largest and highest profile Chapter 11 cases in Central Illinois, as well as helped guide small businesses to successful reorganizations or sales through Chapter 11.
Chapter 7: If the business is losing money on a monthly basis even without payment on long term debt or overdue accounts, the only option may be to close the business rather than digging a deeper hole or falling behind on essential obligations like employee withholding. Sometimes it may be possible simply to close and dissolve any corporation. In cases where lawsuits have already been filed or creditor pressure is intense, Chapter 7 of the Bankruptcy Code provides a way to close the business without the officers and directors being pulled into state court on supplier lawsuits and otherwise have to deal directly with creditors.
DISCUSS YOUR OPTIONS: Call us for an office consultation to discuss your options. In business cases the first half hour of the consultation is free, with costs and fees if we are retained discussed. All consultations are kept confidential. Call our office at (309) 673-5535.