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The timing of your actions is very important. The sooner you express your concerns to your bank, the sooner you will start developing a recovery program which, if anything, will keep your losses to a minimum. In short, the bank will keep you from digging the hole deeper for yourself, and thus keep your exposure down in the process.

Get the right people on your side
The tough part here is assessing who and what you need on your side of the table. What you need are people who understand your industry and your company; have experience restructuring loan agreements; can negotiate with your vendors; and have the experience to sell the program to the banks and vendors. Personal guarantees will be an important part of this process.

Make sure you know your legal alternatives before making any final decisions. A good bankruptcy attorney will be worth his or her weight in gold if they can help you with this process. You will need good tax council, as well, to structure your final arrangements to keep as much of the adjustments from reaching your tax returns. These same advisors should also be able to assist with the value and sale of assets should that be required.

What we are trying to say is that you are better off being proactive if it looks like your company will not be able to wait out the turnaround. Be proactive, find good people to work with, get it worked out, then get back on your feet and back to work.

Keys to Recovery

To get through the recovery process, you need to:

• Understand your loan documents and provisions
• Have realistic cash flow projections
• Know where you stand personally
• Have knowledgeable help available
• Have a team member who has the experience to restructure and negotiate on your behalf
• Have an alternate plan ready