The first half of 2020 has brought a one-two punch to many small business owners in Maryland, along with many other American families and businesses throughout the region and nationwide.
First, the COVID-19 virus pandemic, which was defined as such in early March, brought many businesses to a slowdown or standstill, and some have not adapted or recovered well.
Then came times of civil unrest in late May and early June. Many commercial properties suddenly needed to implement increased security measures, and some were broken into, looted and otherwise damaged.
Toward recovery after a season of disasters
A business’s ability to weather these storms in the long run will depend on many factors, including location, type of goods and services provided, size of workforce, health of workers and prudent business planning and practices beginning long before the disasters occurred.
Business owners scrambling to bridge financial gaps may cut staff, reduce goods or services offered, cut operating hours, apply for government assistance, file business interruption insurance claims and dig into personal assets – all while practicing extra-vigilant health and safety precautions. Some businesses will survive, some will thrive and some will go under.
What qualifies as covered business interruptions according to insurers?
Interactions with insurers may include haggling with them over business interruption definitions, provisions and exceptions in insurance policies that cover disasters.
In some cases, losses caused by the recent vandalism may overlap with losses associated with the pandemic.
For example, where virus-related staffing reductions or supply chain irregularities were disruptive and businesses had been operating at less than usual capacities, owners might have a hard time convincing insurers to treat riot and vandalism related business interruption costs at proper levels. Accountants may need to work overtime and attorneys’ guidance will most likely be essential for many affected businesses.
This hypothetical example underscores the importance of getting a dedicated bankruptcy lawyer on board when a business is struggling to cope with either or both sets of circumstances.
If bankruptcy becomes inevitable
After business owners have exhausted resources and accumulated overwhelming debts in the process, some may be forced to consider business bankruptcy as a way forward. Chapter 7 bankruptcy may be unavoidable for businesses that must close permanently. Chapter 11 or Chapter 13 bankruptcy may be helpful pathways to relief for businesses attempting to continue operations and eventually recover.