With Donald Trump under public scrutiny for filing Chapter 11 bankruptcy protection multiple times in the past few decades, many businesses wonder how a bankruptcy will reflect on their own reputation and future business deals. Is there a way to shield your business bankruptcy from public view? What steps can you take to minimize any negative impact to your business?
Are Chapter 11 bankruptcies public?
The short answer is: Yes. All bankruptcies are public and it is fairly easy to look up a company’s bankruptcy record. That does not mean your bankruptcy will make the papers. If your business is large and typically in the public’s view, there is more of a chance of publicity. Unless local news teams are struggling to find stories to write about, however, smaller businesses rarely make the news.
There is nothing you or your attorney can do to prevent your bankruptcy becoming a point of public discussion. Your attorney can, however, help manage the messaging if your bankruptcy becomes a press event. Experienced attorneys are also able to take steps to minimize the chance of the news getting leaked.
The stigma: Is it real?
While Donald Trump’s bankruptcies have certainly made the news, it is important to remember that everything he has done and will do is under scrutiny because of his roles as politician and celebrity. The stigma attached to business bankruptcies is no longer what it used to be.
After Congress liberalized business bankruptcy rules in 1978, many more businesses began filing bankruptcy – some as a tactical decision rather than simply a means of resolving debt challenges. Today, there are more than 5,000 commercial Chapter 11s filed every year. Individuals, businesses and even creditors have come to see bankruptcy as a standard option for struggling businesses.
What can you do to protect your business?
The most important first step you can take is to hire a bankruptcy lawyer familiar with the nuances of business bankruptcy. Find someone who understands how important a business’ reputation is to its bottom line and who will work with you to help you maintain your positive image while setting the stage for a better financial future.
