Starting a business is a difficult and trying endeavor. The American Bankruptcy Institute reported that over 24,000 businesses filed for bankruptcy in 2016. That is no surprise considering around 45 percent of companies do not make it to their fourth year of business. However, bankruptcy is not the end of a small businesses, and filing can actually have benefits. Here are some of signs that you may need to consider filing Chapter 11 bankruptcy for your business:
You are Experiencing a Cash Flow Crisis
If you are having a bad month or quarter, then you may be able to see the light at the end of the tunnel. There are ways to cut expenses to help create more cash flow. But if several clients are paying late, you are several payments behind with suppliers or facing creditor collection actions, then you may want to consider bankruptcy as a solution.
Your Personal Assets are at Risk
If you signed a personal guarantee in order to get financing for your small business, you may need bankruptcy to protect your personal assets. Some banks require a personal guarantee when the business does not have enough collateral for their financing. This guarantee makes you personally responsible for the repayment of the loan regardless of your business’ structure.
You Have Researched Potential Options Besides Bankruptcy
Negotiating with creditors and vendors that you regularly do business with may be a good way to start to address your cash flow issue. Though some vendors may be willing to work with you, it is not their obligation, which may leave you back at the start with money troubles.
The Kansas City business bankruptcy attorneys at The Sader Law Firm can help you determine whether your business would benefit by filing for Chapter 11 bankruptcy. You can learn more about the benefits of Chapter 11 bankruptcy on our website or by speaking with one of our attorneys.