Reuters reports here that there is a fascinating new study out indicating that CEOs of business wait too long to file for bankruptcy. The thrust of the study indicates that bankruptcy is often the best way for a troubled company to reorganize and proceed forward. This is because bankruptcy is often expensive and requires capital that, if you wait too long, may be unavailable to the corporation in its time of best use.
In my experience, this has definitely been true. Filing bankruptcy is an embarrassing and very difficult decision, even for (and often especially for) business executives. It implies a failure, either real or imagined, of some sort. However, the truth is, that bankruptcy is a financial decision. There should not be any moral judgment attached to it. Unfortunately, creditors have perpetrated the belief that bankruptcy is a moral decision. It’s unfortunate, because bankruptcy can help in many difficult situation.
Thank you for taking the time to read this article by Tempe, Arizona bankruptcy attorney Glenn Roethler. The views reflected by this article are not necessarily held by all members of Greeves, Price & Roethler, PLC.