As a bankruptcy attorney, Dennis J. Shaffer sees people at one of the most challenging times in their lives. And with the pandemic-hobbled economy, he’s getting busier. Take, for example, his client in the personal service industry (who, understandably, asked that their name be withheld).
It was almost a year ago, shortly after the coronavirus first landed on our shores, that the client started having trouble paying the business’ bills, including loan payments. “In January, I realized that the debt structure was increasingly tough to stay current with,” the client says.
The business was shuttered for three and a half months due to the non-essential business closure orders, then, once it reopened in July, it struggled with the shortened hours and lack of space to adhere to social distancing mandates. Working closely with Shaffer, the business owner opted to file Chapter 11. But the owner is still unsure how it will turn out.
“[The bankruptcy] has added to the uncertainty of tomorrow, because the virus is still with us and the fears continue,” the client admits. “Also, the notification of bankruptcy has caused a negative reaction with our clients. Employees, clients, friends, and family look at you differently.”
But Shaffer, a 20-year veteran in the field who has been consistently recognized among the “Best Lawyers in America,” says society needs to reframe how it thinks of bankruptcy, particularly as the pandemic takes its toll on more businesses. He points out that while it is about paying off creditors, it can also give debtors a fresh start. And he prefers to refer to himself as a “restructuring professional” rather than a bankruptcy attorney since restructurings can be done without declaring bankruptcy.
“Most restructuring professionals see themselves as problem solvers,” he says. “Bankruptcy isn’t a bad word. Even though it has an extremely negative connotation, it really is a tool. The various chapters of the bankruptcy code offer specific relief that are great tools to help alleviate problems for clients.”
And that rethinking of the bankruptcy stigma he refers to may eventually happen simply because of the sheer volume of filings to come: Shaffer and others in the field know there’s a tidal wave of business failures on the horizon.
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