In a default situation any collateral of your business is now under strict requirements dictated mostly by your secured creditors.

This is an important fact to know that many clients either do not know, or do not always realize the full extent of what that means.

Let’s take, for instance, your assets.  If you are trying to raise cash for any reason, you cannot sell the assets of your business without the banks express, written, permission beforehand.  If you have a third party running a business and using your collateral while the bank decides wether or not you can sell it.  That new company can not sell the assets to raise the funds for the bank, even if the bank agreed and this party just needs to fast cash.

The same holds true for cash.  If you are in default, you are operating with the bank’s money.  You can pay needed expenses if you are in operation, but when the business is closed, the cash in your accounts needs to be sent immediately to your secured creditor.  That being said, you do not have to stop paying payroll, and that includes you.  The bank can not make you work for free.  This does not mean you can take large amounts of cash out personally before the bank takes your money.

The rule of thumb is be careful, listen to the experts and avoid taking logical leaps in the interim, even if it seems like the only way.  We provide strategies which will mitigate losses and increase relief, but it is not the same as taking collateral or cash.  There is a right road and a wrong road and the wrong road is a dead end!