After your Pennsylvania company goes through bankruptcy proceedings, rebuilding your business can become a complex, time-consuming process. Knowing what to expect after emerging from commercial bankruptcy can help you through the process of resuming or restarting operations.
Understand the Type and Outcome of Your Bankruptcy
The first step in planning to rebuild a business after bankruptcy involves understanding the type of bankruptcy your company has filed for and the outcome of the bankruptcy case. A Chapter 7 bankruptcy will liquidate the business, requiring you to sell the company’s assets to generate funds to repay creditors. Because the company’s liabilities may exceed its assets, you may have nothing left after a Chapter 7 bankruptcy to rebuild from. Furthermore, you may have continued liability for paying remaining business debts.
Conversely, a Chapter 11 bankruptcy involves a reorganization of a business and its debts, to have the company emerge from bankruptcy in a financially stable position. Chapter 11 bankruptcies allow firms to retain their assets, allowing them to reorganize and rebuild operations to make the company more profitable.
Assess What Went Wrong
The rebuilding process should also involve a period of reflection for you to identify what led to your business’s financial troubles, such as cash flow issues, market changes, or miscalculations with your business plan. Understanding what went wrong before bankruptcy can help you avoid repeating those mistakes. Accountants or business consultants can provide an objective analysis to help you identify the problems that caused your company to file for bankruptcy.
Rebuild Credit and Financial Standing
Rebuilding your business after bankruptcy will also involve repairing your business credit (and your personal credit if you guaranteed your company’s debts). You may need to obtain secured credit cards or take out business loans secured by assets like inventory or accounts receivable. Working with lenders who specialize in post-bankruptcy borrowers can help you get more favorable terms for financing or debt. Making timely payments during Chapter 11 bankruptcy and after emerging from bankruptcy can also help rebuild your company’s credit faster. You should also adopt a hard rule of keeping your personal finances separate from business finances.
Create a New Business Plan
Reorganizing or restarting your business after bankruptcy may also require you to create a new business plan based on the lessons you learned from reflecting on why your company failed in the first place. Your post-bankruptcy business plan should depend on realistic financial projections, as basing your recovery plan on best-case scenarios may lead your company back into financial trouble when those scenarios fail to emerge. An effective business plan should focus on low overhead and dependable cash flow.
Regain Trust and Rebuild Relationships
Finally, you must regain trust and repair relationships with your customers, vendors, employees, and investors. A business bankruptcy can damage various stakeholders’ confidence in a company’s ability to achieve success, even after it reorganizes and gets its debts under control in bankruptcy. Rebuilding relationships will require demonstrating a commitment to sound business practices. Positive testimonials or references from other customers and vendors can help you bolster your reputation with other stakeholders. Small documented successes can also help customers, suppliers, and investors regain confidence in your business’s path to success.
Contact a Commercial Bankruptcy Attorney Today
If your business has filed for bankruptcy or is considering doing so, hiring experienced legal counsel can assist you through the process and help you rebuild your company and resume operations. Contact The Cooney Law Offices today for a confidential consultation with a commercial bankruptcy lawyer to learn more about what to expect when putting your business back on track after filing for bankruptcy in Pennsylvania.
