When to Consider Bankruptcy
Bankruptcy is a tool. Sometimes it creates the breathing room a business needs. Sometimes it is the wrong tool. The goal is a deliberate decision—not a panic decision.
Signs it may be time to evaluate bankruptcy
- Multiple lawsuits, judgments, or constant enforcement activity
- Accounts are frozen (or repeatedly threatened) and operations can’t function
- Payroll, taxes, or insurance are becoming unstable
- The business is burning cash with no realistic path to stabilization
- Out‑of‑court creditors will not cooperate in any meaningful way
Real‑world example: Waiting too long
A company tried to negotiate while default triggers multiplied. By the time bankruptcy was evaluated, options were narrower and more expensive. The lesson: if bankruptcy must be considered, it should be considered early enough to preserve choices.
Before you decide
- Gather contracts, notices, and all litigation papers
- List your “must‑pay” items (payroll, taxes, insurance, critical vendors)
- Get a simple snapshot of revenue and cash flow (last 60–90 days)
- Talk through out‑of‑court options honestly (workout vs. no workout)
Related topics
Workouts
Out‑of‑court options may preserve the business if creditors will cooperate.
Mental Health
Bankruptcy decisions often come with stress and shame. Support matters.
Financing
Many bankruptcy decision points start with financing pressure and defaults.
Need help
Email contact@sesnylaw.com or call 512.761.8378 to discuss the decision point and next steps.