Obviously, the best way to avoid bankruptcy is to make more money than you spend, but we know all too well that this is easier said than done. Often to stand up a business, debt has to be accrued on the promise of future earnings, but those future earnings don’t always go as planned, new expenses come into the mix, and unforeseen circumstances are all too common. If your business is already on the edge of bankruptcy though, then you are going to know the top 6 ways to avoid business bankruptcy. Kerkman & Dunn is here to help with that.
1. Hire a Business Lawyer
We can’t recommend this enough. As lawyers, we may be a little biased, , but many of the clients that come through our doors looking to file bankruptcy for their business could have avoided it if they came to us sooner. We can help you explore your options in great detail to ensure that your business has the best chance of avoiding bankruptcy, and if you should have to file for Chapter 11, Kerkman & Dunn will be ready to help you get through that process with the best possible outcome.
Read More: How Can a Lawyer Help With Small Business Planning
2. Talk To Your Creditors
Remember, creditors want their money, and they want to keep making money. You both are in a situation where if you win, you both win, if you lose, you both lose. Talk to your creditors to determine if you can get a temporary reprieve from payments, reduced payments, or anything that can help reduce the financial burden on your business, even if it’s only temporary.
3. Sell Non-Essential Assets
This is a big one. Remember, with a Chapter 11 bankruptcy, you would be restructuring your business and likely selling off non-essential assets anyway. If you can get out ahead of that and save yourself from going through bankruptcy in the process, then it’s worth exploring.
4. Eliminate or Reduce Expenses
If you are renting space that you are underutilizing, have company utilities or luxuries that aren’t necessary to maintain revenue, or even if you need to reduce your workforce, these are options you should consider.
5. Maximize Revenue
Maybe this one seems obvious, but perhaps there are revenue streams that you are currently relying on that can be optimized or maximized. When you are on the brink of business bankruptcy, you need to consider all your options.
6. File For a Wisconsin Chapter 128
As the name implies, this will only apply to businesses in Wisconsin, but an alternative that the Wisconsin law provides is known as a Wisconsin Chapter 128. This is not bankruptcy nor is it subject to federal oversight, but it still provides a plan to pay creditors. It’s faster, cheaper, and can be a good alternative to bankruptcy if you find the right business litigation lawyer.
What’s the Difference Between a Chapter 11 Bankruptcy and a Wisconsin Chapter 128?
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