To be quite honest, our Business Turnaround Chapter 11 success rate is nearly 100% over the past thirty years. I chalk up this resume to picking good clients who are willing to work for their freedom. If I had to look at some common denominators of success, it is for sure one of three things.
Chapter 11 Success
First and foremost is they want to succeed and the fortitude to maintain a tough daily schedule every day until the deed is done and the Chapter 11 is succeeded. Financials and sales must be kept high enough to create, for the court and the creditors, a sense of organization in the company and hope for the future. An Owner is forced to look at what works and what doesn’t work. More often than not bad habits need to be set aside, replaced with honest, hardworking business ethics. Questionable practices are the reason people get into trouble in the first place. Accountability in sales margins, correct ledgering of AP/AR and accepting new quality control programs always is a hard pill to swallow for the Rockstar in charge. After years of doing things “whatever way seemed to work,” those strong enough to just simply set down Frank Sinatra’s song “My Way” and do it the “Right Way” will win.
Second in line is an ability to take direction. When faced with liquidation one must follow a crucial and specific path to safety. Realizing that others know more about the subject of survival and that Heaven has a hand in Lady Luck’s idea of your success can be measured in “how fast one can get off of it.” (bad behavior) When faced with the option of secretly doing it the “old” way or continuing on the inconvenient path of the “right” way the strongest individual can stay the course. Bankruptcy is filled with rules and regulations that must be adhered to. The truth is that this “order” should be instituted out of bankruptcy as well. It’s tough to stay inside the boundaries of correct financials, restrictions imposed by current cash flow, not borrowing money against perceived new sales or a bridge in payroll due to collection failure. Some would say it is impossible to run a company without multiple lines of credit. Those who sing that song eventually fail catastrophically time after time after time after time.
Third is perhaps the toughest most illusive challenge and perhaps not necessary to sustain a successful Chapter 11, but rather life complete. Once a plan is confirmed, there is no more threat of creditors, monies have been negotiated to a manageable amount and for the most part back-debt to the IRS is simply a monthly payment that is also very affordable. With a slate clean, old thinking has a way of oozing its way back into one’s psyche. We hear the melodies of sourpuss songs like, “look how much it cost me to get through this,” “My success would’ve happened anyway, I was already on my way back” “Now, I can do it my way.” Ultimately, for those who have succeeded completely and forever, the song is reminiscent of the old gospel hymns of the past, “Amazing Grace, how sweet the sound… that saved a wretch like me…, I once was lost, but now I’m found, was blind, ..but now, I see..” Get it.
You can overcome these three points and succeed in reorganization. Don’t be afraid to break from those bad habits and people that detract from your success. Step away from the old song and dance that got you in trouble.
Call me I am here to help.