“Don’t Jump the Gun: How to Determine if Your Business Really Needs to File Bankruptcy”

Dykema senior counsel, Lewis Landau, was interviewed for Smart Business Los Angeles’ August 2012 article, “Don’t Jump the Gun: How to Determine if Your Business Really Needs to File Bankruptcy.” The article cautions businesses considering bankruptcy, that bankruptcy may not be the best option for remedying a troubled situation. Landau discusses the “difference between needing to declare bankruptcy and simply wanting to declare it.” He explains, “most cases are not have-to-files, they are want-to-files, when people feel the need to do something to cure their problems.”

The article goes on to discuss the different factors that may sway a business in either direction, such as the cost to file bankruptcy and exposure to a large number of new people and agencies. Landau cites the U.S. Department of Justice’s Trustee Program, its trustee officers, the court and creditors as having a stake in a debtor’s future once bankruptcy is filed.

Landau continues the discussion with an overview of other factors that should be weighed when considering bankruptcy, including the operation of a non-profitable business. He says that “post-bankruptcy debt—to the extent it is unpaid—receives administrative expense priority, which means it’s the top priority at the same level as unpaid legal fees.”

The article concludes by encouraging businesses to find an attorney who knows the system and understands the pros and cons to filing, before taking action.

Click here to read the complete text of “Don’t Jump the Gun: How to Determine if Your Business Really Needs to File Bankruptcy.”

Reprinted with permission. ©2012 Smart Business Network Inc. Reprinted from the August 2012 issue of Smart Business Los Angeles.