This story appears in the
November 2000 issue of
Entrepreneur.
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Q: My business has failed, and
it's time to liquidate assets. Is it better to work with the
bank on negotiating the sale of my company's assets or leave it
alone and let the bank handle it completely?
A: This is a very subjective
question, in which many factors have to be weighed to come up with
an answer. How critical is your time frame? Do you have a good
relationship with your lender despite default, and what is your
emotional state after such a loss? If your relationship with your
lender is good and you are up to the emotional challenge, it's
always better to stay involved to the very end. After all, when
everything is liquidated and gone, you'll be the one
responsible for the remaining debt, and the bank can, and probably
will, sue you for that money. You and you alone will have the
contacts in the industry to help you get top dollar for your
assets. A bank will more than likely not have useful contacts and
while trying to recover as much as it can, will have to pay
industry experts for consulting or sales fees, further decreasing
the total recovery.
My suggestion is to ride it out to the end. Businesses fail
every day, and it's the character you display in handling that
failure that can determine whether a lender will loan you money in
the future.
Doug Hood is a co-founder of Rainmaker Capital Corp., a
capital acquisition consulting firm in Cartersville, Georgia.
Co-founder Marilea S. Hood contributes to this column. Send
questions or anecdotes via e-mail to doughood@mindspring.com.