In these unprecedented times, being proactive is imperative in charting a viable path forward. Waiting until the last minute to rehabilitate the business moves a company further away from the goal of resolving issues outside of court. In their article for Daily Journal, David Kupetz and Victor Sahn discuss how companies can advance on a restructured and sound basis.
“Companies need to prepare cash budgets based on alternative assumptions about the length and severity of the shutdown/slowdown caused by the pandemic,” wrote Kupetz and Sahn. “An anticipated potential liquidity crunch constitutes a key ‘trigger’ signal for management that prompt action needs to be taken and outside guidance should be accessed.”
When appropriate, business reorganization through a more formal process should be considered to allow the company to maximize the opportunity for successful business reorganization. If out-of-court restructuring isn’t feasible, a prepackaged Chapter 11 plan or Assignment Benefits of Creditors (ABCs) may be viable options for a cost-effective exit strategy.
Read his full article here.