Case Study: When My Business Venture Failed

Hi. Lee Phillips. I’m an attorney. Yeah, you knew that. That’s okay you’ll get over it. I want to talk to you for a minute about the possible bankruptcy of your small
company. And I’m going to tell you a story. It’s a personal story. It’s my story everybody’s got one and it was many years ago a bunch of guys came to me and said,
“Hey we’re experts in this. “Phillips, you finance the company, we’ll run it, we’ve done it for decades, we know how to do it, absolutely no problem we can make a ton of money you just put up this money you’re the silent investor.” And so I did that. I knew these people for a long time. I knew they’d operated their
company. Should work. I was pretty hands-off for about six/eight months. Then they came to me and they wanted more money. And I said wait a minute why do we need more money? You’re supposed to be making a ton of money. And I started to look into it. The real short story is is these idiots hadn’t even kept the checking accounts. They’d thrown the checking account statements away and this is before the day when you could
get everything online and go back 60 years We didn’t have any bank records. We didn’t know anything. and I started to look at it and they were really under water. They owed the printers they owed, you know, everybody in their book for money, the services that they had
provided. And it was my name that was on the line. I could put more money in, a little bit more money, not a lot. So I fired everybody and I had some disgruntled employees at that point and they called the IRS on me and the IRS came in and did their six-week audit, it actually took a week in the office. They found five or six hundred bucks, but it was just harassment. And I had a bunch of creditors. What do I do with them? Well I could put the more money in
and try and make it work myself but supposedly the experts
haven’t been able to make it work. So what I did is I went to each one of the creditors. I went to the printer. I went to the all the suppliers I went to everybody and I said look we’ve paid you on time we’ve done everything right for eight months our company is going south I can put a little more money in and try and make it work or I can pay you 30 cents on the dollar that we owe you. if you made good profit on us so far,
hopefully that will cover your base cost you won’t lose money,
but you won’t make any on this round.” And without exception every one of the dozen or so people that I went to gave my story said we’ve never had anybody come to us and say, This is the situation, what do you want me to do? I could declare bankruptcy. The bankruptcy attorneys would eat twenty cents of the thirty cents I was offering them and they knew that and at any rate they were just happy as a clam
to take the 30 cents on the dollar and without exception they said, “Phillips, we will work with you again
any time. One condition and that is you’re really going out of business. You’re not going to just go down the street
and start over again next week and screw somebody else.” “Nope nope nope We’re closing this one down. We’re through with it.” And I have worked with a number of those people
over the years and they have continued to tell me that they’ve never had anybody come to them and say “This is what the situation is, how can we work it out?” Rather than going bankruptcy along that line. I found it much better to go to the creditors
and try and work it out with them and they knew business, they’ve been in business. They’ve seen lots of people be in business. Businesses don’t work. The question is can I honorably shut the business down even though I’m underwater? And the answer to me is, yeah you probably can and I hate to say this, but if you can keep the lawyers out of it, everybody’s going to get more money, period. So how you handle it, up to you. Just a thought. My story on shutting a business down
and trying to deal with the creditors.

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3 thoughts on “Case Study: When My Business Venture Failed

  1. Very much appreciate the advice. Most ppl cower when they are going under. Its good to know businesses appreciate a direct approach to $ issues.

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