Throwing in the Towel? Maybe Not.
While 12 million small businesses are projected to close their doors for good within the next six months, many don’t have to.
As economists say, there is a difference between a liquidity problem and a solvency problem. The first is a lack of cash on hand. The second is an inability to pay debts ever, or at least in the foreseeable future.
A new chapter has been added to the federal bankruptcy code allowing small business owners to keep operating their business, reorganize and cancel some of their debt. Big business has been doing this for decades.
If your vendors and customers are likely to come back, this could help you continue to serve them. If, on the other hand, your business is akin to that of a buggy whip manufacturer, it may be time to call it a day.
This New York Time’s article contains some of the main questions to consider for those thinking about a bankruptcy filing for their small business. When Does a Small Business File for Bankruptcy? And 8 More Questions
Estate planning attorney, Terry Garrett, is a member of the National Academy of Elder Law Attorneys and is active in the Texas and Austin Bar Associations. She graduated with honors from Cornell University. She was on the Dean’s List at Wharton Business School. She earned her J.D. at Columbia Law School, receiving the Parker Award and a Mellon Fellowship.
She assists families of people with special needs, people planning for the retirement years and people administering estates.