The coronavirus crisis wreaked financial havoc across numerous industries, causing fiscal uncertainty for businesses ranging from restaurants to major corporations. Any business dependent on a portion of the economy that has slowed or stopped completely is sure to be concerned about its financial future.
The “First Wave” of Companies Headed for Bankruptcy
According to a recent article in Arkansas Business, the first wave of companies expected to file are those that were in distress before the crisis began. This includes businesses like Neiman Marcus, which filed for Chapter 11 earlier this month.
Travel businesses took a massive hit, too. Airlines like Trans State and Avianca either shuttered or massively reduced operations in advance of bankruptcy in an effort either to consolidate or save operations for when air travel starts up again.
The “Second Wave” is Coming
Arkansas Business also notes that companies that were fine before the pandemic, but have suffered major losses since, are next.
Think about all of the businesses impacted: restaurants, shopping centers, small stores, goods manufacturers; all suffering because of the slowdown in the Little Rock area. Landlords and other owners who could be directly impacted by the sudden loss of monthly income are being asked to prepare for these new circumstances.
What To Do if Your Business is Impacted by COVID-19 Related Financial Loss
If your business losses are severe enough that you are considering bankruptcy, you can look at the short-term increases in the Small Business Reorganization Act.
Chapter 11 reorganization as a “small business” is now an option for businesses with up to $7.5 million in total debt. This change provides an opportunity for businesses that might not have qualified as a small business before to save their businesses and make a repayment plan without losing everything.
However, this particular route may not be right for every business. If your future cash flow is unknown, you may need to consider alternative options. This is why it’s important to consult a qualified bankruptcy attorney. Call Natural State Law at (501) 261-0226 to discuss how we can advise you through a potential Chapter 11 bankruptcy.