When your business is faced with financial distress, there are actions you can and should take before all your lenders, creditors, landlords, customers and employees learn about the situation that may alleviate, reduce or defer the fall-out, that include:
- Confidentiality. Keep the problem restricted to those who need to know at the time.
- Honesty. Only disclose or provide information that is accurate and complete.
- Gather. Locate and protect all documents relating to the distress and other situations that could be affected or trigger problems.
- Advice. Ask your attorney, accountant and trusted consultants for advice.
- List. Collect all contact information for key persons.
- Secure. Ensure collateral, cash and other assets are in a secure location and accessible.
- Evaluate. Determine your best negotiating position with each creditor involved and how to demonstrate an acceptable path that minimizes their losses.
- Plan. Prepare an explanation of how the distress occurred and a plan to resolve it.
- New Credit. Look for fresh equity, loans or other relief.
- Communicate. When prepared, communicate with the involved lenders and other affected business stakeholders.
- Protect. Analyze your personal risk of loss and conduct a cost/benefit analysis of putting more of your personal estate at risk.
- Limit. Avoid any actions that could increase the loss or put additional assets or entities at risk.
- Prioritize. Evaluate which stakeholders, customers, vendors, employees and assets are most needed to maintain your core business.
- Discard. Sell, release, reduce or eliminate assets, liabilities and other unnecessary expenses to limit losses.
When a financial distress occurs or is in the offing, quick but well-planned action can help. Our commercial lawyers have assisted businesses and individuals in such situations and can advise you. Please contact us.