You’ve worked hard to build your business, and you understandably don’t want to think about facing bankruptcy. However, in the world of Texas business, it’s wise to be prepared for anything. When you know how to spot the warning signs of impending bankruptcy — and what to do when you see them — you’ll be better equipped to protect your company.
It can be stressful and upsetting to discover that your company may be headed for bankruptcy. However, the sooner you talk to a lawyer, the more likely you’ll be able to solve the issue. Even if your business is in financial distress, you may have options other than bankruptcy.
Warning Signs of Impending Bankruptcy
Businesses in Houston almost never go bankrupt without warning. When it comes to your finances, it’s critically important to be vigilant. If you notice any of these signs, it might be an indicator that your company is headed toward bankruptcy:
- Having to take out loans to finance everyday operations
- Missing bills or payments
- A steady increase in business debt without a corresponding increase in assets
- Decreased cash flow
- Trouble making payroll
- Poor money management in general
- Executives considering using personal funds to cover business costs
- Consistently failing to keep clients or customers happy.
One thing that can sometimes, but not always, be a sign of impending bankruptcy is high employee turnover. Having employees frequently leave can be a sign of deeper issues in the company. It also can be expensive and disruptive to your business’s operations.
4 Immediate Steps to Take
What should you do if your company is on the verge of bankruptcy? Consider taking these five key steps to assess the situation and start creating an effective plan.
1. Take Stock of All Debts
Before talking to any of your creditors or even an attorney focusing on business bankruptcy, make sure you thoroughly understand all of your debts. Write down all of the following:
- The names of your creditors
- How much you owe each one
- When each debt is due
- The interest rate of each debt.
Once you have all of your business’s debts mapped out, you’ll be able to plan which ones to tackle first.
2. Reach Out to Creditors
It’s never a guarantee that creditors will work with you, but many of them will be willing to if you approach them as soon as you have trouble repaying. You may be able to work out a new payment arrangement by doing so. Many creditors would rather work with you directly than take legal action to recover the money they’re owed.
3. Think About Liquidating Assets
Does your company have any non-essential assets that could be liquidated to pay for your debts? If so, it may be an option worth exploring.
4. Contact a Business Lawyer
Handling impending bankruptcy can be scary and overwhelming, but a business attorney can help. If you get in touch with us, we may be able to help you develop a plan to get back on track or pursue filing for bankruptcy.
Bankruptcy Options for Businesses in Houston
Most businesses filing for bankruptcy do so under Chapter 11 bankruptcy, also known as “reorganization” bankruptcy. Here’s a quick rundown of how it works:
- You can remain in control of your business.
- You can borrow new money if the court approves it.
- A debt reorganization plan is proposed.
- The plan is voted on by creditors and approved by the courts.
The bankruptcy process is complex and nuanced, and it’s always wise to have a business bankruptcy lawyer by your side. The Weisblatt Law Firm team has helped many business owners who have been in your shoes, and we can give you the support and guidance you need throughout the process. We can even offer you assistance with rebuilding after bankruptcy.
Depending on your circumstances, some alternatives to bankruptcy may be better for your business than others. The best way to select the one that meets your needs is to speak with a lawyer who understands your business and your goals. Call Weisblatt Law Firm at (713) 666-1981 today!
Alternatives to Bankruptcy in Texas
You May Have More Options Than You Think
Bankruptcy may prove to be the best option for your business. But you shouldn’t immediately jump to bankruptcy as a solution as soon as you run into financial trouble. You may find that one of these alternatives is a better fit:
Accounts Receivable Factoring
With accounts receivable factoring, your business can have a line of credit with your accounts receivable as collateral. This option may not be possible if you have few clients or little cash flow, but it can be a good choice if your business is starting to experience some financial challenges.
Opening New Revenue Streams
Diversification can help make your business more stable. Of course, this is something to consider at the first sign of financial instability. If your company is already in dire straits, it may be financially impossible to start diversifying your streams of revenue.
Debt Settlement
If you’re having trouble paying creditors, you may be able to settle the debts for less than you initially owed. Some agencies can assist with this, but it’s also worth reaching out to your creditors informally to try to work out a settlement agreement.
Credit Counseling
Credit counseling is another avenue. Just as they do for individuals, some credit counseling agencies will help business owners understand their financial situation and help them repay debt.
Is Your Houston Business Going Bankrupt? Call Us Today.
The Right Attorney Can Be Your Guide
At Weisblatt Law Firm, we take pride in helping business owners like you navigate all the legal challenges that come with running a business. Whether it’s something as simple as a minor contract dispute or as serious as impending bankruptcy, we can help you discover all of your options so that you can make an informed decision. Our firm focuses on solutions, and we’re committed to helping you find solutions to even the most challenging of problems.
Is your business facing bankruptcy? Don’t wait. Give Weisblatt Law firm a call at (713) 666-1981 to set up a free phone consultation today.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
