Monthly Archives: February 2020

What if Businesses Close?

There is some talk in the news about being prepared for “serious disruptions” in our lives if the Coronavirus (Covid-19) starts spreading in the community.  There is even more talk behind closed doors.  Everyone I know who is responsible for their own business is considering options or actively planning for a reality where we are being encouraged to stay home and not gather in public.

I don’t know what will happen or when it will happen.  What I do know is that we are living in a very different world then we were even a few years ago.  The Bankruptcy courthouse routinely allows out -of-town attorneys to attend hearings by telephone.  Video conferencing is now cheap, easy and completely doable from a phone.  Electronic signatures are not only a thing, they can be legally binding.  Electronic document transfers and payments have become common.  It is not, however, common for a lawyer to file a bankruptcy for a client without substantial face-to-face contact; and there are some good reasons for that.  That doesn’t mean those reasons can’t change.

Now, let’s get real.  If the Governor tells everybody who can to stay home on Friday — I’m taking a snow day.  If he asks everyone who can to stay home as much as possible for the next few weeks — I will be conducting business from my desk at home, and those biases built into our system in favor of in person consults instead of digital consults will just have to adapt.

So, I can’t tell you if you will get sick.  I can’t tell you what impact this will have on your income, your expenses or your ability to pay your bills.  What I can tell you is that if you need to file for bankruptcy, defend a collection case, or deal with errors on your credit report — we will find a way.


New Small Business Option

Last Fall Congress passed a new subchapter of Chapter 11, Subchapter V which is a new option for small businesses.  It doesn’t go into effect until later this month, so no one really knows how it is going to work yet; but it appears to be a lot more accessible for really small business owner/debtors.

One of the many problems of a traditional chapter 11 bankruptcy filing is not just the extraordinary expense, but the amount of reports and records that had to be maintained by the debtor.  It looks like the new Subchapter V will be a lot more accessible for businesses that don’t have an in-house CFO — or even an in-house accounting office.

It will be a few more weeks before it goes into effect, and it will be interesting to see how long after that before someone files the first case, but I think all bankruptcy practitioners are looking forward to seeing if this is a real, practical solution for the sole proprietor or the business with a handful of employees to successfully restructure debt and recover from a rough patch.

As is always the case, though, all reorganization bankruptcies require that there be enough business left to reorganize.   Too often, small business owners wait too long to call a bankruptcy lawyer.