Corporate Restructuring: 10 Reasons You Need an Experienced Attorney
(DGIwire) It takes a strong entrepreneurial spirit to manage the helm of a company. This fortitude essential to success can be a detriment when, for any number of reasons, financial difficulties arise and a corporate restructuring becomes a necessary decision to restore operations to profitability.
As hope springs eternal, a disciplined approach, guided by an experienced attorney will likely result in appreciable and measurable gains in the company’s operations as well as on its balance sheet. This knowledge and experience to counsel a business on what steps are necessary in order to restore a company not only to profitability—but to do so in away that is both timely and economical—can save a lot of headaches, and possibly the business as well.
According to Sunny J. Barkats, Esq., who was recently named one of the top corporate securities and finance attorneys in New York for 2014 by Thomson Reuter’s subsidiary Super Lawyers™ and Ira Abel, head of the bankruptcy and corporate restructuring group at JS Barkats PLLC, any one of the following ten situations warrant calling in expert legal advice.
- Inability to pay suppliers. This inability is usually a reflection of critical cash flow issues that should be objectively addressed.
- Reduced sales volume. Lower sales will ultimately impact a company’s bottom line unless there is a corresponding reduction of expenses. Many managers need objective guidance on adequately adjusting their operations to account for reduced sales.
- A one-time extraordinary expense. Fires and natural disasters require help. Sometimes the initial response will determine survival…or not.
- Poor strategic decisions. Many managers are ‘too close to the trees.’ An experienced legal advisor can step back and provide the full forest perspective for better decisions as necessary.
- Loss of a major customer. Both operational and managerial perspective may need to change when a significant revenue source is lost.
- Rapid expansion. Growth is great—but it comes with escalating costs. Too often companies suddenly find they are undercapitalized and need to get “right-sized.”
- Termination of long-term obligations. Leases that no longer suit the business size and operations are an example of a long-term obligation that might need renegotiating. Expert advice can save thousands and sometimes hundreds of thousands of dollars.
- Legacy debt. Union obligations may need to be addressed by a legal professional when businesses are downsized by circumstances or events. Certainly these are not negotiations for the inexperienced.
- Increase in outdated inventory. Is your business valuing its inventory at inflated prices, greater than the market will reward? If so, this will start digging a hole you might not be able to climb out from.
- Increase in expenses. For fear of losing market share, companies often wait to long to raise their fees. Acting when squeezed and no longer profitable can impair objective decision-making.
“These are just a few of the tell-tale signs of corporate financial distress. Obtaining the ongoing advice of an experienced legal team, whom can recommend a proactive and aggressive approach if necessary, can become the difference between corporate longevity or bankruptcy and failure,” concludes Mr. Barkats.
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