What Is A Preemptive Workout?

A typical situation when a prospective client shows up and asks for our help is that they’re in foreclosure, unable to pay monthly debt service and other overhead requirements, revenues are down, overhead is up and they’re in default all over. Then, there is the small business owner who is not yet in default but is losing money and it is already clear that, in the near future, default will occur and the cash will be gone. At the time being, however, he remains in power and with resources. He’s on a decline but still in power. This is the perfect time to engineer a workout, when you’re in a downturn, not yet in default, with resources adequate to support the workout requirements. This is what we call a preemptive workout.

There are many more options available from this position than when you are out of cash and already in default and ripe for liquidation. Additionally, you have far greater opportunity to make appropriate adjustments regarding your personal net worth when current with your bank than when in default. There is a far greater range of activity you can engage in prior to default and insolvency then is permitted afterwards.

A preemptive workout is a far better strategy and more likely to produce the best results. Don’t wait, act now. You know what is going to happen down the road. You know you will eventually be in foreclosure and then liquidation. Don’t wait, it doesn’t get better. Once you are in a tailspin there is no reversing it. Do the workout now.