Will COVID-19 cause a flurry of business bankruptcies?

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Rick Kuebel is the head of Bankruptcy, Restructuring, and Insolvency at Locke Lord, a worldwide business law firm with offices in New Orleans.

Kuebel has his hand on the pulse of business in the region.

When asked if we can expect a great number of bankruptcy filings in the coming days or weeks, he responded:  “We don’t anticipate a huge rush of bankruptcy filings immediately.”

“There are also some structural limits with access to the court right now,” Kuebel continues.  “They’re based on current coronavirus dictates that are in place.”

Kuebel goes deeper on the subject: “While courts may be taking [bankruptcy] filings in, it may be difficult to get first-day motions in person or live testimony over the course of the next few weeks.”

Kuebel illustrates that point to highlight an important opportunity. 

He can’t stress enough if you’re a business owner facing an uncertain future for your company, you need to start to get a grip on your situation right now and be ready to move fast when the time to act comes. 

He says companies need to… “roll up their sleeves early and often and keep the enterprise alive 60-90 days and to assess what’s available to them in the way of Small Business Administration or any other governmental assistance.”

Kuebel says before any company owner decides to go the route of Chapter 7 (corporate liquidation) or Chapter 11 (debt relief and reorganization), they need to have learned, applied for, or exhausted all opportunities to keep their company solvent and alive.

“Through the SBA website, look at the information that’s coming out on these programs,” Kuebel says.  “Make a decision early on and get an application in early on.”

Kuebel cannot stress enough the importance of applying as quickly as possible for relief from the SBA:  “Like everything else with the government, it won’t move fast.  If you think you’re going to need liquidity sooner, that SBA loan application may need to go in next week!”

Kuebel says the aim here is to save a company, not write it off.  And, though he is in charge of bankruptcy, restructuring, and insolvency for Locke Lord, he is optimistic about saving companies:

“In my world I see nothing but distress,” Kuebel says.  “But, it’s amazing how few times that distress is actually terminal.” 

Locke Lord LLP has prepared an on-line Quick Study about the U.S. Government’s “CARES Act” or The Coronavirus Aid, Relief and Economic Security Act.

For more information click here.