Going Broke From Covid-19? You Are In Good Company Who could have predicted that a virus would shut down the...Read More
Covid-19 continues to take its toll on Americans with thousands of companies declaring bankruptcy as a direct result of the Pandemic. These aren’t fledgling Small Businesses; these are many of the household names that you’ll recognize as the old pillars of the retail world. Just like consumer bankruptcies, experts predict a huge rise in business bankruptcies in the second half of 2020 that will extend well into 2021 and maybe beyond. With no signs of the virus abating, more businesses and consumers alike will need to understand the pros and cons of bankruptcy for their particular case.
In May the victim list included: J. Crew, Gold’s Gym, Nieman Marcus, JC Penney, and Hertz, just to name a few. June saw the addition of 24-Hour Fitness, GNC and Chuck E. Cheese (is there nothing sacred?). And at the end of July we saw Ann Taylor, Brooks Brothers, and New York and Company among the many other filers seeking bankruptcy protection. Some of these brands have been around for over a century; many have multiple storefronts and have both national and international fame. By most accounts these companies all had good reputations and very professional management that were paid huge sums of money that, actually, is one cause for their reorganization. These guys know that their receipt of millions of dollars in salaries is contingent upon a successful reorganization.
Most of them have taken the position that, despite the ongoing epic struggles with Covid-19, they’ll see some of the best years ahead after reorganizing their debt. They’re very bold but that’s how they rose to the top of their heap in the first place. Their powerful corporate attorneys know that bankruptcy protection is the best and only way to survive the current economic crisis. And, when we get through the instant crisis, these companies anticipate that reputations will remain in intact and that consumers won’t hold anything against them for doing what they had to do to survive the pandemic. Are they delusional or have they jumped the gun reacting too soon? Absolutely not. All the companies mentioned are professionally managed and have retained great attorneys to see them through this rough patch of weather.
The same could be true for you if you are willing to follow their lead. Millions of people have lost their jobs through no fault of their own and whole industries remain shuttered because of the coronavirus. Outside of a miracle, and despite often touted significant governmental efforts, millions of people in the US will be filing bankruptcy before the end of the year. The trend isn’t good, but as these major companies know, the filing for bankruptcy is not a death sentence. On the contrary, they have chosen to beat the crowd of expected followers (i.e. you) – that is, they’ve decided to file before people like you wake up. Bankruptcy saves assets, eliminates toxic debt and gets creditors off their backs so that they can focus on the business at hand. There are, of course, consequences to filing bankruptcy but the alternative for many is far too bleak to consider.
In fact, bankruptcy is good and results in true financial healing as the economy adjusts because it’s forced to write off from the creditors’ books dubious and uncollectable financial receivables. At the same time this is happening, Small Businesses – i.e. you the individual, will be restored and will again pay taxes to state and local governments for the salaries of essential workers who are actually your neighbors and friends.
Bankruptcy provides a fresh start – meaning that it gives deserving people a second chance by getting them out from under a lifetime of debt and back into the black where they can start working and producing again. We should be thankful we have this Right and we should remember that a huge number of prominent Americans have gone on to succeed after bankruptcy. Most importantly, without bankruptcy protection in place many consumers and Small Businesses will simply be unable to survive the current economic Tsunami that is already on our shores.
The Bankruptcy Lawyers of Randall & Waldner believe that everyone of us is a Small Business and that there won’t be a true recovery until the Small Businesses are able to rise again. The Big Businesses(?) – well they can always go to Wall Street, float more bonds or sell more stock and be back up and running without skipping a beat. Small Businesses (you and me) don’t have access to credit or the financial markets to get a bail out and we don’t pay our Small Business owners millions of dollars in good times as well as in bad as Big Business does. The deck is stacked against the Small Guy – hair stylists, bar tenders, musicians, construction contractors, farmers, mechanics, insurance agents and even your Saturday night babysitter – just to name a few. It’s all of us that live by our hard work who rarely, if at all, get the breaks like the Big Businesses get. And the funny thing is, that without Small Guys, our economy won’t heal.
All of us have a patriotic duty to get America back to work again. If that means filing for bankruptcy to rid ourselves of unsustainable debt so that we can again work and pay our taxes – well … that’s our duty. It’s not pretty or glamorous but it must be done if we expect to have America back again. Not one of us have purposefully put ourselves in jeopardy just to be able to discharge our lawful debts. Not one of us caused Covid-19 to ravage our landscape, kill our vulnerable citizens and wreck our economy. But all of us together can resurrect America and all of us are charged with the duty to do just that. Should we feel bad about having to file for bankruptcy? Well, speaking for myself, I have more than enough reasons to feel bad and bankruptcy issues aren’t in any one of them.