Despite the fact that corporate bankruptcy is very common in Quebec, a taboo always resides when it is time to consider it. Some fear and a sense of failure can sometimes be associated with such a term.
However, on certain occasions, this is the best solution to take when you are no longer able to continue your business and financial obligations.
In this article, the team of financial services advisors N. Séguin inc. you expose 5 signs that should make you think about commercial bankruptcy.
Loss-making results towards company bankruptcy
The repetition of loss-making results at your company should make you think of bankruptcy as a potential solution. It is possible to see the losses or profits of a company by adding three types of income and expense results:
- Operating profit
- bottom line
- exceptional result
In case of a deficit, your company gets a net result below zero. If you are unable to generate enough profits to reduce these losses, it is essential to act quickly.
To drown in debts
Does your company’s inability to pay off your debts significantly slow down your business? Do you reject payments from your suppliers daily because you are unable to pay them? You do not know if you should pay your suppliers or your employees?
The insurmountable indebtedness of your business can be explained by excessive expenses for a return on investment too low or too slow.
If the debt of your company constantly leads you to difficult decision-making, choosing to go bankrupt can give you a second chance.
By going bankrupt, your debts are erased. So you can start from scratch.
The loss of a major customer and the snowball effect.
If the prosperity of your business depends on a small number of customers or a few important customers, the risks of bankruptcy are increased considerably. Commercial activities or a clientele that is not diversified are all too often catalysts for bankruptcy. When a key client leaves, the consequences tend to follow by a kind of snowball effect.
This hard blow may be the opportunity to introspect as to why this important customer has decided to stop doing business with your company. You can use this defeat to further improve things that do not work so well and better satisfy your future customers.
When bankruptcy is your only protection against your creditors.
Business bankruptcy is a solution against the incessant pressures of your creditors. Being insolvent can act as a protection. When you declare bankruptcy, creditors no longer have any rights in your business. They can no longer order you to liquidate your assets, your stock or even seize your salary.
In other words, when there is a business bankruptcy, you free yourself from your creditors.
If you are subject to prosecution
If your business is subject to prosecution by your creditors and you are unable to pay off your debts, a trustee in bankruptcy like N. Séguin inc. remains the only legal ally available to get you out of such a legal process. He holds a license and certifies his expertise in the administration of a bankruptcy process. A trustee also provides the communication and can propose agreements with your creditors.
For example, declaring bankruptcy and joining a trustee in bankruptcy can free you from stress and facilitate communication with your creditors.
One thing is certain, in the event of a corporate bankruptcy, it is essential to act very quickly and surround yourself with a team that will guide you to a more promising future.
Benefit from a free consultation with one of our financial adjustment advisors who will tell you what to do in the event of a business failure.