Bankruptcy

When People Have Never Run a Business, They Think a Business Failure Involves a Crook

By Joseph McDaniel, Esq.

And businesses that fail do so for a spectrum of reasons.

But seldom is a business failure a result of fraud, or a business owner who did bad things and got rich.

It happens sometimes, but it is a massive exception.

Even in the old North American Coin and Currency Case, which was at the time the biggest deal in town, and which did give rise to some criminal prosecutions, was primarily caused by the inability of the company to hedge its bets when it bought gold and silver.

And even the few intentional crooks who run big Ponzi schemes typically have "Plan B" to pay all the money back (this does not make them good guys).

I was saddened to see a recent article about a notable consignment business, Terri's Consign, filing a liquidation bankruptcy.

The thing that saddened me as much as the failure of a well-known local business was the collection of unkind comments written by readers of the article.

They made the assumption, based on utterly inadequate information, that the owner was a crook, which I do not believe for a minute.

It's hard to run a small business, much harder than running a big business or publicly traded company, because with a huge business, you can buy the very best advice and talent on the planet.

And many small businesses fail because the owner burned out, because of embezzlement, because of a downturn in volume (this is a depression, after all), and because a bank decides it no longer wants to finance that kind of business, and please pay back the five million dollar loan within ten days.

If I had a nickel for every small business owner I had met who went broke by dumping all their personal savings back into the business in a futile, doomed, heroic effort to save the business, I could buy a hot fudge sundae.

A big one.

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on June 13, 2010 (boomark / email).