Why Company Bankruptcy Is a Death Sentence for Your Firm
Company Bankruptcy
Regardless what your lawyer may tell you, company bankruptcy will likely be the end of your firm. In our experience 4 or 5 firms do not survive a Chapter 11 company bankruptcy filing. What normally happens is the judge converts the case to a Chapter 7 liquidation or all assets are sold leaving the company as a shell with only obligations.
There are several reasons for this including:
- The firm does not have a company bankruptcy war chest of cash. If you want to get through a Chapter 11 filing, you need to have at least $100,000, and, for most medium-sized firms, you will need over $1 million. You must have cash to pay the legal fees and court costs, which can be large in a company bankruptcy.
- The firm does not have a profitable underlying business model. If the firm cannot make cash from its operations then it should not be in business and should not try to reorganize.
- Creditors want their money NOW! They will push for a conversion to Chapter 7 company bankruptcy.
If you believe that company bankruptcy will save your company, you are likely mistaken. Of course, you need to discuss your specific circumstances with your lawyer to be sure. Nevertheless, this is our experience.
To avoid a filing, you need to explore several company bankruptcy alternatives. In particular, you should read The Insider Secrets to Saving Your Business: The Step-by-Step Turnaround Guide. This 2-volume course takes a few days to read and it rewards you with the knowledge of a turnaround professional.
With this new knowledge, you will be able to fix your business without a bankruptcy filing usually. This will be your least stressful and least expensive choice.
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