How to Restructure Business Debt
If your company is experiencing serious financial problems and you have to file for Chapter 11 or 13 bankruptcy, you will want to restructure your debt to boost your bottom line. When you do, you will need the approval of the federal government, and the recommendations that follow will help you to accomplish this.
● Complete a background check of local debt-restructuring companies by getting in touch with the Better Business Bureau and finding out if their counselors are accredited by the American Board of Certification. Meet with several of them and inquire as to the success of cases they have handled in the past.
● Generate more capital by issuing more shares. The price will have fallen because of your financial problems, but you should tell your shareholders that you plan to restructure your debt in an effort to avoid bankruptcy, which should generate interest on their part.
● Try to exchange a portion of that debt for the equity your creditors have in the business. However, be certain that the total amount will not give them a majority vote because you don’t want to relinquish your authority.
● If you can buy back shares from your investors, this will provide you with additional funds you can offer to your lenders and help to keep the business functioning.
● Present your restructuring plan to your lenders. If you are doing the restructuring on your own or through your attorney, they will have to vote on the plan. If you decide to consult a third-party debt agency, they will contact your creditors and negotiate with them to obtain their approval.
● If it will help in lowering your expenses, find new benefit, health care and equipment providers. Every partial restructuring of these operating costs will enable you to have enough cash to repay your debt. You may also need to downsize your staff and your facilities in order to reach this goal.
● Remember to monitor the payments you make to a debt payment agency to ensure that your lenders are receiving the payments they are expecting. If this is not happening, find another debt restructuring company so that bankruptcy can be avoided.
● If you discontinue some of your products and services, your income will be stabilized and you will also be able to refocus your business. When your financial situation improves, you can grow your brand once again.