Bankruptcy / Workout Services

Companies facing weak cash flow, who are failing to take the right corrective action steps, will eventually face hard decisions. If the current management can not turn the company toward profitability for an extended period, there are generally three options that management can choose from:

1. File for chapter 11 of the Bankruptcy Act
2. File for liquidation under chapter 7 of the Bankruptcy Act
3. Or seek an informal reorganization – or “workout”.

Informal reorganization, or “workout”, is often seen by management, stockholders, and creditors as the best solution. This type of reorganization is seen by creditors and stockholders as a less drastic measure and, therefore, is often seen as an option that has the least to lose and the most to gain. This option also has the added benefit of usually being less expensive.

A workout consultant is a person who management will often hire to develop the informal reorganization plan. The initial goal of the workout consultant is to turn the business around. The largest cause of failure for a workout consultant is the lack of willingness to change by the owners or by management. If the company’s informal reorganization fails, the workout consultant helps the company through either of the two other formal options, chapter 11 or chapter 7.

We can assist in a workout or orderly bankruptcy by:

• Reviewing financial reports and communications with attorneys and major creditors.
• Developing a reorganization plan to increase cash flow.
• Implementing and monitoring a rehabilitation plan

If you are asking yourself whether your company needs a workout consultant, then most likely you need one now. If you’re borrowing to pay vendors, employees, and taxes, there are ways a workout consultant can help. Contact our team at McKonly & Asbury to learn more.

Contact our Bankruptcy / Workout team today by emailing Scott Heintzelman at sheintzelman@macpas.com.