Gersten Savage Advises On
Small Business Restructuring

NEW YORK, Nov. 28, 2007 – Small companies faced with restructuring seldom have the resources available for an expensive Chapter 11 bankruptcy proceeding, according to New York law firm Gersten Savage LLP, which advises small- and mid-cap companies and start-ups.   Consequently, small companies in the midst of restructuring need to employ different tactics, said partner David Danovitch.

"Smaller companies seldom have the luxury of Chapter 11 restructurings, which require extensive funds for a true reorganization proceeding.  As a result, smaller companies have to be more resourceful and creative in how they approach restructuring," Danovitch said.

Time also is of the essence for small enterprises which may be caught in the credit crunch and have difficulty raising capital, he said.

"You have to move quicker for a smaller company, which typically will have waited longer to get help, and so will have fewer options and less cash," Danovitch said.
Gersten Savage offers these tips on restructuring for small businesses:

• Assess your cash position.  Be practical and conservative.  Know what your true cash position is and what it is likely to be for the next one to two quarters.
• Scrutinize your business.  Be dramatic.  Get rid of unprofitable operations.
• Examine your obligations.  Try to have your current obligations restructured on more favorable terms. 
• Get help fast.  Many companies find themselves in a deeper crisis because they are waiting and hoping for that big, profitable sale to pull them out of difficulty.
• Don't neglect the equity markets.   Explore your options for raising equity instead of debt.  If you do tap the equity markets, be mindful of your situation: don't assume you are in a position for a great valuation and hold out for something that may be unattainable.

Gersten Savage, one of New York's top five independent law firms, specializes in securities regulation, general corporate law and finance.  Gersten is celebrating its 30th anniversary this year as an independent firm.

Back to News & Publications