Restructuring Corporate Debt
restructuring corporate debt
Business Debt Help – What To Do When The Debts Become Significant
Many small businesses in recent years have started to notice the pain of the business cycle. There is little cash flow and debts are past due. Unsecured credit cards and business lines are up to their limits. Basically, these small business owners can’t afford to pay their bills. If the company is an LLC, then the owner may wonder if he or she can be held personally liable for the debts and liabilities of the company; and they probably wonder if it will this affect his/her personal credit?
If you can relate to the above paragraph then your company has fallen into the precarious position of needing more cash than what’s available – a very common and painful scenario. First, let’s examine what went wrong – and whether you can dig your way out. Here’s a simple version of what often happens: An entrepreneur with a big idea launches a business and snares numerous customers. As the business grows, the owner takes the focus off sales and gets bogged down by administrative tasks, like whether more space and employees are needed. “They start focusing on those issues rather than growing sales,” says Stelluti. What needs to happen is to for you to only spend money on those things that generate sales until you have enough reserves to focus on the “big picture to come.”
Small-business owners in this position have a few options. One is to jumpstart cash flow by finding new customers, or tending to existing ones. A second is to analyze receivables: Do customers owe the business money? If so, then it’s time to collect! On the flip side, if creditors are circling, consider using the services of a business debt resolution service/turnaround company to get back in line.
The alternatives aren’t pretty. Can one be held personally liable if his or her company defaults? Most likely, yes. “Most small-business credit-card issuers do base their decision on the owner’s personal credit, and require the owner to assume personal liability,” says Gerri Detweiler, a credit-card specialist in Sarasota, Florida.
And what about bankruptcy? It’s painful, messy, expensive – and should only be used after all options are exhausted. No business owner sets out to fail. Therefore, most businesses will make every attempt to pay their debts off if someone will just give them a little time or a “break” during the hard times. No one wins if the business files bankruptcy. The business is gone and therefore the supplier(s) receive less income, the customers have lost a purchasing option and the small business owner often ends up filing personal bankruptcy in addition to the corporate bankruptcy.
Hopefully this article offers you some ideas about the realities you are facing. While not ideal, focusing on the actions which enhance cash flow and reduce your business debt liability will give you the best odds of helping your business survive tough times.
Greece Has `A Chance’ to Avert Restructuring… Pryce says
