My last Blast explained how we are often engaged to resolve financial problems for businesses and individuals with the goal of avoiding bankruptcy . I went on to explain how we address this goal for individuals using our unique “Debt Resolution” solution and how important it is that a strategy be grounded by a solid concept. The same need for a solid concept exists when I pursue a “Workout”’ for a business which is seeking to avoid bankruptcy and to reach terms with its creditors that will pay them a portion of what they are owed over a sustained period so that the business can survive.
My concept here is unique and normally a surprise when disclosed. It is “We don’t Bluff!”
Let me explain. The process to get business creditors to be flexible and negotiate new terms on debt that is in default – often requires conveying a statement to the creditor that, “Unless you work with us, the only outcome will be our client has to file for bankruptcy.” Creditors often refer to this as “playing the bankruptcy card” and like to respond by saying, “we are not going to alter our position based on your threat of bankruptcy”. They are in essence saying, “we think you may well be bluffing and we are not going to compromise based on that.”
So here is where the key concept – “We don’t Bluff” comes in. First, we don’t convey this strategy until we have analyzed and structured our business client’s finances so that bankruptcy is available and beneficial if the creditor will not come around. Next, when we tell the creditor this is our contingent plan – we do two more things:
- We provide the analysis showing them that in bankruptcy they will receive far less than they will if they work with us.
- We tell them and then provide them any and all financial information they ask. We hide nothing.
We do this to make good on our statement that “We don’t bluff.” We are able to do this because we have analyzed and structured matters so that revealing the information will not hurt us. This is the key concept most professionals in this situation don’t understand. Attorneys always want to hold back and “protect” their client. Protecting, however, is not accomplished if holding back information is the reason why the effort fails in persuading the creditor to work with you. The right way to “protect” is to disclose, but make sure the disclosure can’t hurt you.
This is the key concept I use to often succeed in avoiding bankruptcy and resolving major creditor lawsuits for business clients. Of course, there are other key strategies in play and no, I’m not going to share them here. After 36 years of dong this, it would take too long and reveal too much of what I need to protect!
If you find your business in this situation, keep in mind this tip. You need to structure things so you don’t need to bluff. And don’t forget, we are holding a FREE seminar this coming Wednesday, March 27th – “Time to Spring Me from the Debt Burden”. You and your friends are invited, of course. Sign up below.
Have a great week,
P.S. Did you know that THAV GROSS offers free consultations for business, financial, and tax problems? Call us anytime – (248) 645 – 1700 or CLICK HERE to send us a message.