Keeping afloat in the face of bankruptcy
Sometimes, your very best intentions can go awry. In the case of business finances, no matter how well you prepare, organize and manage your cash flow, sometimes things just go wrong. Maybe one of your key customers decides to take their business to a foreign supplier; or, perhaps new technology has deemed one of your staple products obsolete. Regardless of the circumstances that have led you there, if your business is heading toward financial crisis, you will want to take informed actions if your hope is to right your course.
When financial crisis is on the horizon, you may believe that bankruptcy is your best or only alternative; however, it could be your very last resort. Before you consider bankruptcy, there are a number of alternatives you can look at, for example:
- Take an in-depth look at your cash flow: Analyze the money coming in and going out of your business, and develop a realistic budget that is focused on paying for essentials. Do everything in your power to pay your employees.
- Debt-consolidation: Financial institutions can offer loans that gather all of your outstanding debts, consolidating them into one manageable, lower-interest payment.
- Keep your creditors in the loop: The bottom line is that your creditors want to get paid — attempt to accommodate them by proposing a reasonable, manageable payment schedule.
There are also formal alternatives you might want to consider as a means to keep your business afloat amidst difficult circumstances:
Division I Proposal: A trustee works with you to pay your creditors back some of what you owe, often over an extended period of time. Unlike bankruptcy, Division I allows you to retain your assets and avoid actions taken against you by unsecured creditors.
The Companies' Creditors Arrangement Act: If your corporation owes more than $5 million to creditors, you can seek Court protection and continue to operate while you prepare a repayment plan (Plan of Arrangement).
Want to find out more about the available options? Check out the Office of the Superintendent of Bankruptcy Canada's Alternatives to bankruptcy page.