In Part I of this two-part series, we began to take a look at some of the important factors that need to be considered before a business bankruptcy is filed. Here, in Part II, we will continue to examine some of the important questions business leaders need to ask themselves before deciding to go through with a bankruptcy filing.
If a business is going to pursue a Chapter 11 bankruptcy filing, most likely with the intent to keep the business in operation after the process is complete, the main question to ask beforehand is: is there a viable plan? The desire to keep a company open for business is one thing, but there needs to be a legitimate plan that can be executed in such a way that the company will come out of the bankruptcy filing leaner and in a better position to regain profitability.
But, even if there is a plan, it will need to satisfy all parties - namely the company's creditors. That brings up the next factor to consider: does there need to be some major changes in the management structure of the company? Not just in titles, but in actual personnel? This can be one of the toughest parts of a Chapter 11 bankruptcy to approach, and the answer may not be pleasing to everyone with a stake in the game.
Lastly, consider one major potential game-changer: a bankruptcy proceeding is public, so there may be some details that come out during the process that the company's leaders would rather remain private. All of the factors listed in Part I and here in Part II of this two-part series are major considerations that need to be weighed before a business bankruptcy.
Source: FindLaw, "Ten Things to Think About Before Filing for Bankruptcy," Accessed Oct. 23, 2015