Debt Restructuring: Is It A Possibility For Your Company?

When your company is hit with a financial crisis, the immediate knee-jerk response is bankruptcy. However, bankruptcy can have longstanding negative effects on how you conduct business in the future, and how your employees respond to the announcement that the company cannot continue as is. While you can still consult with a bankruptcy law practice as you choose, look first at the possibility of debt restructuring.

Moving This over Here, and That over There

With debt restructuring, you look for ways to cut company expenses. This may still mean having to let several employees go, but most companies in your position attempt to refrain from that until there are no other options. Usually, it just means moving money around to help reduce debt to a more manageable level. This is done through refinancing some debt, and then moving the saved money to other debts that are more pressing. It also includes asking for, and receiving, a temporary suspension of interest on loans and credit card debt so that you can pay off chunks of the principal.


There are limitations with debt restructuring. You may only have a few months to less than a year with most creditors to reduce debt or suspend interest rates before monthly interest rates resume. If your company cannot bounce back and get enough profits to keep the lights on, so to speak, bankruptcy may still be in your future. If your company does begin to accumulate profits again, it is in the company's best interests to use those profits to pay down debt before the deadlines are up.

Buying Time

Most companies view debt restructuring as buying yourself some time. You can "buy" up to a year through debt restructuring that may or may not be the company's saving grace. If it turns out to be a really good decision, then you can avoid bankruptcy altogether. If the added months or year made no difference, then you will have to file for bankruptcy anyway. At any rate, you put off something that would have otherwise been very detrimental to the company as a whole.

Recognizing When Debt Restructuring Will Not Work

Of course, some companies are too far gone when owners and CEOs begin looking at debt restructuring as an option. They see the writing on the wall, it says, "Nothing can be done to fix this." If this is your situation, and you are certain of it, your bankruptcy lawyer can begin the process of filing for bankruptcy.

Contact a lawyer, like Stuart R Whitehair Attorney, for more help.