Warning signs

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Here are 10 signs that a company may need to consider bankruptcy:

  1. The fair value of the company’s assets is less than its liabilities.
  2. The company is unable to pay all of its debts as they become due.
  3. The company may be in default with its lender, is unable to comply with the terms of its loans, its lender proposes to reduce credit availability, or the lender has transferred the company’s loans to a workout group.
  4. The company is unable to acquire sufficient raw materials from suppliers, or suppliers have adversely changed credit terms.
  5. The company is unable to satisfy customer purchase orders due to the lack of working capital.
  6. The company is at risk of either losing key employees or unable to pay key employees on a competitive basis.
  7. The company is unable to pay all of its tax debt or employee benefit obligations.
  8. There are disagreements between management and/or the shareholders over the future direction of the company.
  9. Pending litigation threatens the future viability of the company.
  10. The company has been marketed for sale as a going concern, there are a number of possible buyers, and a court supervised process is necessary to complete the sale process.


Source: Michael Polsky, a partner with Milwaukee-based Beck, Chaet, Bamberger & Polsky, S.C., who has worked on some of the largest corporate receivership cases in the state.

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