Tuesday, December 1, 2020

This post was originally published on Forbes - Startups

Home Startups Behind The Curtain—Chapter 11 From The Inside—Chapter 15—Closing The Case And Final...

Behind The Curtain—Chapter 11 From The Inside—Chapter 15—Closing The Case And Final Thoughts

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This post was originally published on Forbes - Startups

The end

We have reached the end of the Chapter 11 case.

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The prior chapter of Behind The Curtain can be found with the following link:

We have reached the end. The Brettco Plan has been confirmed and the Company is working free from the oversight of the Bankruptcy Court and the US Trustee. Even though the Plan has been confirmed, the case is still open. There are a few “post-confirmation” requirements that Brettco has to do to get the Case closed. To get the Case closed, Brettco will need to file a motion to close the case. This is a fairly straight forward motion. Brettco will need to tell the Court that the Plan has been “substantially consummated.” What that means is that Brettco has started making payments under the Plan. There is another reason why Brett wants to have the Case closed. The US Trustee requires that a debtor continue to make quarterly payments, based on the amount of distributions until the case is closed. The closing of the Case stops those payments from being required.

Going back to Chapter 2, Brett answered a lot of questions about how he felt before he started the case and his overall thoughts about the case. To put a bow on this, it is time for the exit interview.

Q. Brettco has been out of bankruptcy for more than a year. Looking back over the process, what are some of your overall thoughts?

A. I am so glad I hired an attorney with a lot of experience in Chapter 11 cases. Jeff spent a lot of time with me so, going in, I had a good idea of how the case may play out. Fortunately for me, my case was fairly quiet. There were not a lot of motions filed and there was no litigation. I owe that, in large part, to Jeff. He was able to speak with the other lawyers and convince them that litigation would not help either client. I am glad he was thinking of how to help Brettco, rather to simply increase his fees. Of the motions that were filed, my suppliers did not object, even though a few had their attorneys call Jeff.

Q. Did you have to change any of your business practices during the case?

A. Yes. A few of my suppliers stopped doing business with me and some of them wanted to switch over to COD. At first, I was concerned about having to find new suppliers while Brettco was in bankruptcy. I was surprised by how many new suppliers were willing to do business with me. As it turns out, some of the new suppliers are better than the ones I was working with before the filing. As for the COD suppliers, I have become used to that and we still operate that way, even today. I will tell you something. I like paying some of my vendors on COD—it keeps me from “getting out over my skis.”

Q. What is the best advice you can give to a business owner who is thinking about filing?

A. First, hire an attorney who has done this before and knows what they are doing. Their reputation in the bankruptcy community is extremely important. You want to do everything you can to make sure they are well respected by the Court, as well as other attorneys.

Q. Since you had never been through bankruptcy before, how were you able to do that?

A. Great question. Of course, I didn’t want to start making calls, because I didn’t want anyone to know I was thinking about filing. That is where having people you trust becomes so important. First, I spoke with my accountant. He was able to ask around about various attorneys, specifically looking into their reputation in the legal community.

Q. What else?

A. Once you have decided on the attorney, listen to their advice. On that, you need to trust your instinct. If you think the attorney is a bit of a flam-flam artist or a huckster, they may be. Remember, you are putting your life’s work into this person’s hands. If you are not sure, find a trusted confidante and ask them. If you find their advice sound, take it. Also, don’t be afraid to call your attorney during the case and ask questions. He will neither find you intrusive nor the question as a waste of his time. He knows that part of his job is to calm you down. There were plenty of times I needed that from Jeff.

Q. How has the bankruptcy process changed the way you operate your business?

A. First, you need to think things through. Don’t reach for the “shiny object.” In my case, I never should have expanded beyond Brettco’s traditional base. When I did that, I thought I would make a lot more money. What ended up happening is I overextended myself with high payroll costs on jobs that I got because I made proposals that were the lowest, not a good combination. Now, I only bid on jobs that my teams can handle, with no outside labor costs.

I also work closer to home than in the past. Another problem with expansion was the increase in costs that I did not think about, such as travel, housing, and per diem.

Q. Any last thoughts?

A. I still feel bad that I ended up hurting some of my long-standing suppliers (by only being able to pay them a percentage of what they were owed); but I will tell you I am proud that I have had some employees for 30 years and they have never missed a single paycheck, not even during the bankruptcy. All of them are employed by Brettco to this day.

If I was to point to one thing that kept me up at night was the thought that I could lose both my business and my house. Neither became an issue and Jeff was great at getting me to understand this (even though I would still wake up during the night and think about it).

I know I have said it many times during this interview, but I can’t emphasize it enough—find the right lawyer and listen to them.

By the way, one last thing. I still call Jeff whenever a legal issue comes up. He is not only Brettco’s lawyer but has also become one of my trusted advisors.

Earlier chapters of Behind The Curtain can be found at the following links:

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