By: George W. Hopper, Attorney
The well-being of you and your family are of utmost concern during this pandemic. What about the well-being of your business? All businesses, large and small are navigating through the current economic downturn and its unique challenges.
Over the past 38 years, I have been advising business clients through five economic recessions. Each recession had certain similarities, but each was also unique in cause, effect and length. Nevertheless, during each recession, the business clients that survived and ultimately prospered each made the same crucial decisions in common:
- Each client chose to be proactive rather than reactive in confronting economic and legal challenges to their businesses before they exhausted their financial resources; and
- Each client engaged competent legal counsel and financial advisors sooner rather than later in the process.
Of course, it is without question extremely challenging to successfully manage a business in a good economy. During a recession, the task becomes even more challenging and can easily become overwhelming with the addition of new legal issues, shrinking cash flow and reduced available credit. The situation can change and will change dramatically and quickly during this crisis. For this reason, there will be no substitute for timely and competent legal and financial advice.
Depending on the situation confronting your business, there are a variety of tools that can be employed to find solutions. Early in the process, management can consider and pursue solutions that do not involve a formal legal case or proceeding such as:
- Loan restructuring
- Turnaround negotiations with affected creditors
- Sale or merger
If circumstances do not lend themselves to any of the forgoing tools, business clients may have to resort to litigation, or chapter 11 bankruptcy or a combination of the two approaches.
The bottom line is the sooner the business client proactively meets the challenges presented by the current economic crisis, the greater number of options will be available to address the client’s needs. In fact, during and as a result of the 2008 great recession, the vast majority of cases that I was involved in were successfully resolved out of court, which saved many thousands of dollars in professional fees and generated a superior outcome for both the struggling business and its creditors. Each one of those cases began and ended as a result of the timely decision by management to engage experienced legal counsel. It does not pay to wait. Contact me to discuss ways I can help you protect your business.