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Corporate Bankruptcy Ain’t What It Used to Be

Corporate Bankruptcy just isn’t what it used to be.   Until fairly recently companies would file for bankruptcy as protection while restructuring.   That isn’t the case anymore.  According to a recent article in the New York Times, corporations file for bankruptcy and then move on to liquidation.

There are many reasons for this change in the dynamic.   The main reason lies in the fact that most companies are so deeply in debt they can not secure additional funding for restructuring in this period of the credit crunch.  Potential lenders fear that offering funding would be to no avail.   The money would only go to creditors and would do little sto save the business itself. If you can’t get credit and can’t obtain funding, then there is really no point in trying to restructure.   The prevailing wisdom is to stay afloat as long as possible, liquidating inventory and hoping in some cases for a government bailout.

It is no secret that many businesses are struggling.   It is a matter of just getting by until the economy turns around.   This is a terrible economy, as we all know.   The only differing perspectives on whether the economy will sink even lower or if it will turn around.  And when?   Many have an opinion, but no one knows for sure.   Forget “for sure.”  It is doubtful if anyone really has a clue.

So with companies going out of business, they could be liquidating while owing you money.  Old account are unavoidable.   But be wary of new accounts.   We have had people come to Corra Group, asking that we conduct corporate research and business credit reports to examine why they are so fortunate to have prospective clients approach them.   In some cases the new, prospective clients can’t get goods and services elsewhere and turn to our clients in desperation.

Everybody is hoping to do new business, but taking on such clients may lead to disaster.  It is a pity to deliver to them goods and services and have the clients beat you for the tab.   They go out of business and there you are, holding the bag.   So check them out.   There are a number of background checks that are available, including International Business Credit Reports.

Check them out before you take them on.

By Gordon Basichis

Gordon Basichis is the Co-Founder of Corra Group, specializing in pre-employment background checks and corporate research. He has been a marketing and media executive and has worked in the entertainment industry, the financial, health care and technology sectors. He is the author of the best selling Beautiful Bad Girl, The Vicki Morgan Story, a non-fiction novel that helped define exotic sexuality in the late twentieth century. He is the author of the Constant Travellers and has recently completed a new book, The Guys Who Spied for China, dealing with Chinese Espionage in the United States. He has been a journalist for several newspapers and is a screenwriter and producer.