Patrick O'Malley

Case Study: A Tale of Two Businesses

Whether or not your business files bankruptcy, proactiveness is perhaps the most powerful approach you can employ. To better illustrate the importance of proactiveness, we will take a close look at two business clients: 1) a married couple who planned ahead and sought help right away, and 2) an investor who waited too long to find a solution. Let’s see how each of their situations played out.

The Good

A husband and wife owned a retail shop that was closed for six weeks due to health orders. Even after they were able to re-open their doors, sales were a fraction of what they had been—not nearly enough to pay the operating costs and overhead. Furthermore, the couple owed a large debt from purchasing the business several years earlier, and they had an expensive commercial lease that was set to expire in 16 months.

Because both the debt and the lease were personally guaranteed, the husband and wife would be personally liable, and their home and all other personal assets would be at risk from creditors—even if they filed bankruptcy.

The couple brought their case to Business Bankruptcy Solutions early on, however, and we helped them renegotiate the debt downward by $225,000 and delay payments until business improved. We also helped them negotiate a new lease extension that lowered the rent. Over the term of the new lease, they will pay $300,000 less than they would have under their old lease.

When the couple first contacted us, they were struggling and worried about losing both the business and their personal assets. Just 90 days later, they had manageable overhead and were well-positioned to do even better in the recovery than before the pandemic hit.

THE RESULT: Through proactive planning, our clients saved $525,000 in a negotiated workout, saved $300,000 in rent, and avoided bankruptcy.

The Bad

A contractor and real estate investor was struggling because his contracting business was down, and his tenants were not paying the rent. One of his investment properties was already foreclosed before he contacted Business Bankruptcy Solutions. This was very unfortunate, as he lost out on $125,000 of equity that could have been used to reorganize the business.

If he had contacted us earlier, we could have filed bankruptcy to halt the foreclosure, which would have given him enough time to sell the property for the full market price. He could then have used the extra money to help reorganize the rest of his business.

THE RESULT: Bankruptcy may be unavoidable for this prospective client, and reorganization will be more difficult. His delay in seeking professional assistance cost him at least $125,000.

Which Business Are You?

The right legal and financial solution for your financial hardship will depend on many different factors. The one constant, however, is that your time is severely limited. When you bring your case to Business Bankruptcy Solutions, we will help you find the best possible course of action, whether that means bankruptcy or a suitable alternative. Keep in mind that the longer you wait to contact our firm, the fewer options you may have.

If your business is struggling to stay afloat, call (720) 674-7311 or contact us online to schedule your free initial consultation. We look forward to helping you overcome these challenging times.

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