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Financial Distress: Further Reflections

On Behalf of | Jan 6, 2021 | Bankruptcy, Business, Debt, Firm News

By: Laura Day DelCotto

In my final blog of 2020, I mused on take-aways about “dumb things” management does when succumbing to financial distress fears. And I will say, the so-called “dumb” things are really about emotional intelligence and how stress affects each of us. Financial stress is proven to be right up there with all the other major stressful life events like divorce, death, and others.  If you are running a business, financial distress will at some point rear its head.

Last time, I mentioned Denial, Trust, Communications, and Smart Hiring.  Let’s explore further today.


  1. DECISION-MAKERS.  Talking to someone who is not the decision maker, while maybe not a waste of time, is not nearly as productive as getting in front of those who are making decisions that impact your company’s finances. These include lenders, major suppliers, major customers, and your talent. Work on getting to know the true decision makers, and leaderships within each of these groups, and well before distress sets in.  Talk early and often.
  2. KNOWLEDGE IS POWER.  There are professionals who have lived through your issues before. The more time professional advisers have to know you, your team, your company and your industry, the better the outcome. Calling up in a panic at the last minute is called a “freefall” bankruptcy for a reason. Over all my years of doing this, I can say my number one frustration is knowing that a client waited too long to engage professionals, thereby reducing options for themselves.
  3. ZONE OF INSOLVENCY.  If your board and management doesn’t know what this is, you need professional legal and financial advice.
  4. PEOPLE and TIME.  All the best laid plans are great. The 13 week optimistic cash flow projections are great. All the long-term changes you intend to implement are great. Remember, it takes cash today for survival tomorrow, and everything you are trying to accomplish requires people to act.

More to follow next time. Always more to learn in order to make the best decisions in difficult times.

About DelCotto Law Group

DelCotto Law Group is Kentucky’s asset protection law firm known for its commitment to the lifetime success of its clients. With offices located in Lexington, Louisville and Danville, DLG serves Kentuckians with complicated financial matters, especially in the areas of bankruptcy and complex litigation. For more information please call (859) 231-5800, email [email protected] or reach us on our contact page.