"Owing money has never concerned me, so long as I know where it could be repaid."
BUSINESS DEBT RESTRUCTURING DEFINED
Debt Restructuring is a process that allows a company facing cash flow problems and financial distress to reduce and renegotiate its debts to improve or restore liquidity (cash) so that it can continue its operations.
Some Debt Restructuring strategies and methods are:
Refinancing or replacement of existing debt by new debt when not under financial distress to extend payment terms and lower payment amounts
Out-of-Court Restructuring, also known as workouts, are increasingly becoming a global reality under current economic conditions
Debt restructuring involves a reduction of debt and an extension of payment terms and is usually less expensive than bankruptcy.
The main costs associated with debt restructuring are the time and effort spent negotiating with creditors, lenders, vendors, and tax authorities.
In the United States, small business bankruptcy filings cost at least $50,000 in legal and court fees, and filing costs in excess of $100,000 are common.
Typically, only 20% of firms survive Chapter 11 bankruptcy filings without going to liquidation which results in a business' closure.
Historically, debt restructuring services have been available only to large corporations.
In the Great Recession that began with the financial crisis of 2007–08, a component of debt restructuring called debt mediation emerged for small businesses (with revenues under $5 million).
Like debt restructuring, debt mediation is a business-to-business activity and should not be considered the same as individual debt reduction involving credit cards, unpaid taxes, and defaulted mortgages.
Debt mediation has become a primary way for small businesses to refinance in light of reduced lines of credit and direct borrowing.
Debt mediation can be cost-effective for small businesses, help end or avoid litigation, and is preferable to filing for bankruptcy.
While there are numerous companies providing restructuring for large corporations, there are few legitimate firms working for small businesses. Legitimate debt restructuring firms only work for the business debtor client.
Among the debt situations that can be worked out in business-to-business debt mediation are:
lawsuits and judgments,
delinquent property,
machinery, equipment rentals/leases,
business loans,
mortgage on business property,
capital payments due for improvements/construction, invoices and statements,
disputed bills and problem debts
BUSINESS DEBT & CASH FLOW SOLUTIONS
Bernarsky Partners LLC is a business financial services advisory firm comprised of finance professionals with extensive industry experience offering Business Debt Solutions.
Some of our Business Debt Solutions include:
2. RESTRUCTURING BUSINESS DEBT
4. BUSINESS CASH FLOW ANALYSIS
Setup a free consultation call with us to review your business debt and cash flow situation, business goals and to discuss Business Debt refinancing and restructuring options.