Debt Restructuring
Debt restructuring is usually less expensive and a preferable alternative to bankruptcy. The main costs associated with a business debt restructuring are the time and effort to negotiate with bankers, creditors, vendors and tax authorities. Debt restructuring typically involve a reduction of debt and/or an extension of payment terms.
In the United States, small business bankruptcy filings cost at least $50,000 in legal and court fees, and filing costs in excess of $100,000 are common. By some measures, only 20% of firms survive Chapter 11 bankruptcy filings.
Historically, debt restructuring has been the province of the large corporation with the in-house or retained resources to undertake the process and the financial wherewithal to successfully see it to conclusion. In the on-going economic downturn that began in 2008 a sub component of debt restructuring, known as debt mediation emerged for small business entities (usually revenues of <$5m). Like debt restructuring debt mediation is a business to business activity and should not be confused with or considered in the same manner as the more blurry world of individual debt reduction involving credit cards, unpaid taxes and defaulted mortgages.
Debt restructuring has become a primary means for small businesses to refinance as the market for lines of credit and direct borrowing have shrunk dramatically. The use of debt restructure can be cost effective for the small business, help end or avoid litigation and is highly preferable to filing for bankruptcy as it gives once successful small businesses the chance to recapture that success.
Among the debt situations that can be worked out in business to business debt mediation are: Lawsuits and Judgments, Delinquent Property, Machinery, Equipment rentals/leases, Business Loans or Mortgage on Business Property, Capital payments due for improvements/construction, Invoices and Statements, Disputed Bills and Problem Debts.
Delta Capital Group has a long history in the type of negotiation Debt restructure