When your business is short on cash and owes a lot of money to creditors, bankruptcy is an option you might be considering. Bankruptcy is available for businesses that are having major financial problems, but it is not the only option. If your business files bankruptcy, there will be consequences, and this is why you may want to know what alternative options you have to save your struggling business. One option you could consider is commercial litigation. This is something businesses can use for a variety of reasons, and it could be the answer you need for the financial problems your business is dealing with.
What Is Commercial Litigation?
Commercial litigation is a process that involves a business and a group of lawyers. The business hires the law firm to help them solve a problem. There are many types of problems commercial litigation can help with, including:
- Mergers and acquisitions
- Contract disputes
- Security problems
- Intellectual property right disputes
- Financial problems
When you hire a commercial litigation firm to help you solve your financial problems, their goal is to come up with a plan that will be the most beneficial for you. When they view your financial situation, they may recommend filing for bankruptcy if your company is in a really bad position, or they might recommend using an alternative method to try to fix the problems.
What Alternative Methods Are Available?
When a company is struggling financially, it is usually for two reasons:
- The company does not have a good enough positive cash flow coming in.
- The company is leveraged too much, which means they owe too much money.
To fix these problems, the commercial litigators may begin by contacting your creditors. The point of this is to determine if your creditors are willing to negotiate the debts you owe. If they are not, bankruptcy might be your only option. If they are willing to negotiate, this could be the ticket your company needs to gain control financially.
Your lawyers will work on trying to get the terms of your debts changed. This may involve asking for debt forgiveness on part of the money owed, or it could involve asking for a lower monthly payment or lower interest rate. If the lawyers can work out deals with each creditor, your business may have an easier time affording the payments.
The second thing your lawyers may do is help you come up with ways to increase your cash flow. This may involve expanding your business, or it could involve trying to boost sales with all your current customers.
What Benefits Does An Alternative Method Offer?
In order for a business to restructure itself through bankruptcy, it will have to file for Chapter 11 bankruptcy. This is not only a costly process to use, but it is also time-consuming and stringent. If you use Chapter 11, you will have to go to court to get the entire case settled, and you will have to continuously report your financial decisions and details to the court. You will also be limited as to how much time you are given to accomplish all these things.
If you can use commercial litigation to resolve the issues your company is facing, you will be able to do all of this outside of the courtroom. You will not have to send reports to the court and ask for permission to make decisions. You will have much more leeway with running your business.
Finally, this will also benefit your company because it will not be a public record. Settling disputes outside of court are private, which is often better for a company's reputation.
Commercial litigation offers a way to handle business problems outside of court. If you would like to find out how this could help your company improve its financial position, contact a law firm that specializes in commercial litigation, such as FactorLaw.