Recent news of Revel Atlantic City CEO Kevin DeSanctis’s resignation has brought even more attention to the failing company and its imminent bankruptcy. The $2.4 billion resort is filing for Chapter 11 bankruptcy in order to save the company and wipe clean some of the debt that has been piling on. Unfortunately, the young casino has had difficulty bringing in gambling revenue in Atlantic City and has been unable to fulfill the high expectations of the casino market. Full article.
This bankruptcy filing shows that businesses large and small can run into trouble from bad luck, poor planning, or market conditions. See my article on ways businesses can avoid bankruptcy. However, when a business is in trouble, the biggest mistake owners make is not forming a workout or exit strategy early enough. As with so much else in life, timing is everything. So often, I see businesses that could have been saved had someone sat down to do some serious planning, including consideration of a bankruptcy, orderly liquidation or workout, much sooner.
For businesses, the options include an orderly liquidation, secured creditor workout, chapter 7 bankruptcy, or a chapter 11 reorganization. Each of these have risks and costs, as well as benefits. Careful planning including a detailed look at cashflow and opportunities to reduce expenses or strategically increase revenue is critical. Just as importantly, businesses need to have a multi-prong series of exit strategies. Not planning is a recipe for disaster. All this needs the advice of an experienced business bankruptcy specialist.
We have seen that many business owners delay considering these matters because they fear the personal consequences of a business bankruptcy or shut down. These can include loss of income from the business, loss of an enterprise they have put their heart and soul into, or personal liability. Many have given mortgages on their homes or have personal liability for bank debt and possibly payroll or sales taxes. But ignorance is not bliss. Things do not get better by ignoring them.
Careful planning requires that the individual owners know the options they face personally. At some point, in order to preserve the confidentiality of their discussions, it may be advisable that the individual owners have their own attorney separate from the corporate or business attorney. Options to be explored are workout strategies as well as bankruptcy. Here, the right advice is essential so that the owners can minimize or avoid future problems. The traps are many and easy to fall into.
For both businesses and their owners, being in financial trouble is scary and overwhelming. Hiring the right attorney to help you to plan and guide you through the options and choices is essential. The right attorney can help business owners take back control. There is no substitute for experience. Advice and representation from qualified legal counsel is the best money that can be spent.
Neuner & Ventura are experienced attorneys federally recognized as a debt relief agency helping people obtain debt relief using bankruptcy and other means. As a long-time business bankruptcy specialist, Steven R. Neuner has the background needed. Please contact Neuner & Ventura at (856) 596-2828 for a consultation.