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Real-life story – Business Owners

Read about Robert, who tried get out of business debt, and see how he fared.

Initial Situation

In business, it is important to be prepared for setbacks. A company can face financial hardships because of a bad receivable, important losses in the execution of a contract, an economic downturn or a structural change in the industry. There are laws to allow such companies to restructure themselves and solutions can be within reach. Here is an example.


When it was time to prepare for the upcoming season, the Tremblay family asked its bank for an additional loan to give the business some working capital. The bank refused the family’s request after analysing the club’s financial statements. Although the club was able to make their mortgage payments, sales have been declining for six years such that the company was operating at a loss. To make up for this situation, they only paid their suppliers in part, so the money they were owed increased year after year, until there was more than $500,000 in outstanding bills. The bank manager told the Tremblay family that he saw two solutions: selling the company or getting shareholders to invest cash into the club. The family did not have the ability to reinvest in the company because they were already taking a very small salary to keep the club afloat, and selling was not an option for them, because they saw the club as their life’s work and their only pension fund.

Proposed solution

The family met with one of our professionals who specialize in financial restructuring to find out if there was another solution. After analysing the club’s financial statements and its current operations, they came up with the following restructuring plan:

  • They would ask the bank to reschedule the loan over a period of 25 years rather than 15 years, which would relieve cash flow pressure by $52,000 a year. Also, for the current season, they would apply for a 3-month moratorium on the capital portion of the loan payments to give themselves enough time to rebuild their working capital. 
  • The restaurant would be given up as a concession. An analysis of past performance forecasted that this operation would go from a loss of $45,000 to a profit of $25,000 a year.
  • Golf carts would be put up for sale and the revenue from the sale would be injected into working capital.
  • They would file a $100,000 proposal to creditors, payable 30 days after creditors’ approval. This amount would come from a cousin who would also become a shareholder of the company.


The proposal and the plan were presented to creditors. Seeing an opportunity for the club to stay on as a customer and become viable again, their long-standing suppliers were supportive and approved the proposal. The club was thereby able to cover its expenses for the start of the season with the liquidity generated by the sale of golf carts. Because of the bank’s new conditions and the concession of the restaurant, the company would not have a cash flow problem if its customer base was temporarily reduced. The company now has the opportunity to become profitable again over time.

**The names have been changed to protect their identity.**