Corporate debt relief can involve credit counselors, lawyers, or investment bankers depending on the type of relief sought. Solutions may include negotiating with creditors, financial reorganization, or selling non-core assets. Bankruptcy may be necessary as a last resort.
Corporate debt relief will most likely involve a client and the involvement of a third party, such as a credit counselor, lawyer, or investment banker. Depending on the type of relief sought, the solutions are likely to differ. A counselor, for example, could help a corporate client continue to deal with creditors without declaring bankruptcy. A lawyer, on the other hand, might be involved when a bankruptcy protection filing is the best solution. Investment banks may offer corporate debt relief to qualified clients in the form of corporate finance, which could lead to the sale of certain assets to generate cash.
Credit counselors can help clients put together a corporate debt relief program that allows the company to maintain vendor and supplier agreements and protect assets. For example, if a business is unable to meet its financial obligations, creditors may, under certain conditions, attempt to gain access to a business owner’s personal items. An advisory professional might negotiate with creditors on behalf of clients to prevent this from happening and instead create reasonable payment terms for debtors. The result could be a longer amount of time for a corporation to service debt at potentially better rates for the debtor. If a corporation falls behind on federal taxes owed, a government agency might agree to a payment schedule so that all the debt does not need to be paid right away.
A financial reorganization may be necessary to create corporate debt relief. In this process, debts may be consolidated or the terms of any agreement may be altered. If creditors do not cooperate and a business cannot find any relief, a bankruptcy filing might otherwise be necessary.
Bankruptcy may seem extreme, but it can provide some protection for debtors as these business owners try to regain profitability. This form of corporate debt relief could eliminate adversarial communication and unwanted inquiries from creditors due to the involvement of a bankruptcy judge. Lawyers and investment bankers can guide corporate clients through this process so that the debt is restructured in such a way that the business can continue to operate during bankruptcy and eventually become solvent.
Selling non-core business assets could be a way to raise much-needed capital and avoid a bankruptcy filing. Market conditions must be conducive to avoid selling these items for less than they are worth. Investment bankers offer these services and can advise a business through an asset sale, after which any proceeds can be directed toward debt relief.
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