Business owners throughout the United States are discovering the importance of protecting their businesses because of the Corona virus pandemic. Protecting your business in the age of COVID-19 involves patience including developing a strategic plan for success.
As more Americans lose all or parts of their incomes and struggle with mounting debts. Another crisis looms: A wave of personal bankruptcies.
Bloomberg law reported that Federal Reserve researchers predict the number of virus-related bankruptcies could jump by 200,000 to nearly 1 million unless government programs help stem the tide. It’s crucial that business owners discover all the options available to them to protect their businesses from its creditors in uncertain times.
Alan Hochheiser a nationally renowned bankruptcy attorney with the law firm Maurice Wutscher said “As businesses continue to experience difficulties as we are in uncharted territory due to the pandemic, every business, its advisors, lawyers, and accountants need to be aware of the bankruptcy process. No matter if you are working with the business itself or you are a creditor, an understanding of how to protect your client’s interest will be vital to that businesses ongoing success or failure.”
On August 23rd, 2019 SBRA, a Small Business Reorganization Act was signed into law. The purpose of SBRA was to allow smaller businesses who are struggling with their finances to still file Chapter 11 bankruptcy cases in a more simplistic manner than the current rules governing Chapter 11 cases.
SBRA went into effect on February 19,2020 and many businesses who were already in Chapter 11 proceedings elected to convert their cases to those under SBRA.
This is just one option to look at when discussing your plan of action on how to protect your business.
Understanding your options
Whenever A business or a person is facing a situation where their debt is spiraling out of control there are three options to consider.
- Pay the minimum on all the bills, stay current if you can and hopefully things will get better.
- Negotiate a settlement with your creditors and vendors
- File for bankruptcy
Filing for bankruptcy should be your last resort however the most important thing is to consult with experts such as your attorneys or accountants.
Many of the biggest banks and credit unions have set up hardship programs, offering to defer credit card, auto loan and student debt payments until borrowers can get back on their feet.
Attorney Hochheiser says” The key is to be proactive, many companies are arranging special plans, forgiving late fees and suspending mortgage and rent payments, however you need to ask for these forbearances in advance.
Congress recently pared the cares act relief package, a roughly 2 trillion Corona virus response bill intended to keep the economy afloat and provide financial relief to Americans across the nation. The new legislation instituted some significant changes that affect those considering filing for bankruptcy or anyone who has already filed.
“There are many things to consider before filing for bankruptcy” said Attorney Hochheiser.
Understanding your options and consulting with experts to develop a plan of action is your first step in protecting your business.
As you can see there are many options available to you when it comes to Protecting your business in the age of COVID-19.