When a company goes bankrupt, a wide array of people are affected. Employees, who lose their jobs, no longer have the cash flow to support local businesses. If the effect is drastic enough, those companies must also make cuts to recover from the financial blow; sometimes, those cuts include laying off their own employees. And so the spiral of a recession is born. It is this understanding of economics that has some worrying over the recent news that one-third of all oil companies are at risk for bankruptcy.
Lower Gas Prices and the Fall of the Oil Industry
Fueling up has been easier for Americans lately, thanks to the recent decrease in gas prices. Unfortunately, it has negatively affected the oil industry by making it more difficult for them to generate cash. As a result, roughly 175 companies have managed to accumulate $150 billion in debt, and few of them will be able to find their way out. Bankruptcy may be their only option.
Economy Experts Predict Little to No Effect
Although the downfall of corporate companies have the potential to send the entire country into a downward spiral, economy experts do not fear the same for the potential dismantling of bankrupt oil companies. Those that survive will be able to turn a profit with more ease, and the percentage of oil industry loans registered with American banks is relatively low. They say that these two factors may very well provide the cushioning that our economy needs to survive. Moreover, oil prices are expected to rebound in 2016, possibly even enough to save the fiscally frugal companies who manage to hold on until then.
Even Small Businesses Have an Impact
The oil industry is huge and touches nearly every American in one way or another, but your company does not have to be large to have an impact. Even small businesses can cause rifts in the economy, both positive ones and negative ones. As a result, even small companies should fully understand the pros and cons of company bankruptcy prior to filing.
Alternatives to Small Business Bankruptcy
Proper planning and appropriate considerations on the state of the economy and their specific industry may provide some cushioning, but no business can plan for everything. If your company is currently at risk for bankruptcy, or you fear it may be a possibility in the future, know that there are alternative solutions. Some may even be able to help your company avoid bankruptcy altogether.
Committed to helping your business get back on its feet, Attorney Eric Zelazny can help your company with even the most complex financial situations. Helping small businesses and sole proprietors since 1996, he delivers highly personalized and professional services that are tailored to meet your company’s needs. To schedule your free initial consultation with an experienced Tinley Park business bankruptcy attorney, call 708-888-2299 today.