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Looking for an asset and liability "inventory" worksheet for bankruptcy or ABC analysis

A friend (no, really) is going through a possible bankruptcy event and they want to have a good look at what they have coming in vs. what they owe, statutorily, so they can do a fine-level analysis of a)their obligations, and b)their runway under certain assumptions. A spreadsheet on the subject contributed to the Resource area on Proformative would be greatly appreciated.

Answers

Topic Expert
Jeff Chase
Title: Advisory CFO
Company: Hazelcast, Juicebox Energy, and Social I..
(Advisory CFO, Hazelcast, Juicebox Energy, and Social Inertia ) |

Answering from small start ups standpoint - I suspect the quick answer when the board or VC boards ask for this type of analysis is that, assuming they have complied with their fiduciary duty up to that point, and if they're incorporated in Delaware where boards and directors are best protected, that the only creditors they would care about are the employee liablities - wages, taxes and PTO and such. The rest, ignoring secured debt by banks, is probably a long line of unsecured creditors that will be worked out in ABC. Do others with VC backed companies agree? I don't have a worksheet for this, but a quick look at any forecast will answer the 2 insolvency points - 1 - when you can't pay the bills and 2 - when your current liabities exceed current assets.

Mark Stokes
Title: CFO
Company: Private
(CFO, Private) |

In insolvancy the board (and you) care most about things you are collectively possibly liable for. I have done an ABC and we were very careful in the run-up to the event to sequester all funds we needed to cover "qualified" employee compensation. We also set aside money for non-qualified employee expenses, such as T&E which, as i recall (this was a few years back), is not something the board or execs are liable for, but we wanted to do the right thing and also not stir up the hornets nest.

The discussions with secured creditors are fun, but they have all dealt with this many times before and it's part of their business. Unsecured got left completely out of the picture.

Our board (rightly) wanted to know every cent we had coming, going and owed basically every day. Don't forget that anything you pay within 90 days of going Chapter or ABC can be clawed back by your trustee (at least that used to be the case), so as you approach the wall, be very careful about who you are paying and why. To do this ongoing analysis I hooked up our bookkeeping system to an Excel spreadsheet which took our balance sheet and let me play it forward week by week with who we expected payments from and who we were going to pay. It was my standard full-company business model but with weeks instead of months - nothing else special about it.

John Pindred
Title: CFO
Company: Self Esteem Brands, LLC
(CFO, Self Esteem Brands, LLC) |

Mark is right on the liability concerns. Your friend will want to be mindful of certain taxes (sales tax, payroll tax) and funds held in trust (like 401k contributions) that may have personal liability for officers of the company. He'll want those paid up to date before filing.
Sounds like they may be in the "zone of insolvency", the grey area where fiduciary duties begin to shift from shareholders to the enterprise as a whole, including creditors. Retaining good bankruptcy counsel is imperative, and you'll need to fund their retainer and fees.

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