Insolvency Advice that You Need to Know
Need insolvency advice for your troubled business?
In this short article, we will give you 10 pieces of solid insolvency advice and tips that will keep your company out of the hands of your banker and its business rescue certain.
Here’s our insolvency advice:
1. If you are worrying about default, then you must take immediate action.
Put in place our insolvency advice and recommendations today.
2. It may already be too late to prevent default. Likely, your banker
will not take advantage of its floating lien if the value of the company
is greater than the bank’s loan in the company.
3. You need to review daily your company’s position against the loan
agreements. You do not want to be in violation and, if it is unavoidable,
then you want to delay the default as long as possible.
4. Pay the bank before paying anyone else. Stretch your trade payables as
much as possible. Frankly, your vendors want to help you prevent a bank takeover
because they will get nothing if the bank manages the company.
5. After paying the bank, your next order of payments should be your employees
and the taxing authorities.
6. With the extra time you have created for your firm by following the advice
in numbers 3, 4 & 5 above, you should develop a business rescue and turnaround
plan for your firm. This normally means a radical business restructuring of
your firm.
7. You should find a profitable core business around which you can rebuild
your company. This is the centerpiece of your turnaround plan.
8. Shed all unprofitable units and assets as your turnaround plan requires.
9. Use the cash funds from the sale of units and assets to service your loan
contract with your bank.
10. Carry out the operational elements of your turnaround plan.
That covers what you need to do to prevent default and keep your banker happy. This is just a brief outline of what you must do. A good source of business rescue procedures is The Insider Secrets to Saving Your Business: The Step-by-Step Turnaround Guide. You can find out more at insolvency advice guide.
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