19 SEPTEMBER 2023 WorldWide Drilling Resource® Drilling Into Money Not Boring by Mark E. Battersby Surviving Today’s Bankruptcy Upswing The first months of 2023 have seen a dramatic uptick in bankruptcies - in every industry - according to Epiq Bankruptcy, a provider of bankruptcy data and case management services. Although the increase is most noticeable among large businesses, every drilling business owner struggling with excessive business debt should consider the many options of small business bankruptcy. Not always a bad thing, bankruptcy is a legal process available to a drilling business - or its owner - unable to pay their debts. With a business bankruptcy, a business’s debts are eliminated or a repayment plan adopted. Creditors receive a portion of debt repayment through the debtor’s available assets. No one wants or plans to file for bankruptcy, but it can offer owners of a struggling small drilling operation a chance to stay afloat. While not every business entity can file or benefit from each bankruptcy type, there are a number of general benefits including: ] Extra time to reorganize. A temporary breather from debt payments and/or renegotiated contracts might be all the drilling business needs to turn itself around or survive the current economic crisis. ] A competitive advantage. The ability to temporarily suspend the operation’s debt-service obligations, pay only a portion of some current debts, and dismiss signed contracts can result in a more efficient operation than those of competitors. ] Decreased personal risk. Simply shutting the doors of the drilling operation or business doesn’t stop its expenses. Mortgage, rent, insurance, property taxes, security and maintenance costs, and other expenses called “carrying costs” will continue after closure. If the operation’s owner is personally liable for any or all of the business’s debts, he or she might lose their savings and/or home. ] If a business continues to lose money, a bankruptcy can stop the outflow of cash for which an owner, partner, or shareholder might be personally liable. Although bankruptcy has the potential to wipe out all of the business’s debts, not all debts, especially tax claims, are eligible to be forgiven through bankruptcy. Obviously, no small business owner wants to fail and, regardless of the spin put on it, bankruptcy is a failure. However, despite its negative connotation, filing for bankruptcy may be the best course of action for any debt-ridden drilling operation - or its owner - to take. Regardless of which side of the troubled business you are on, professional help is strongly recommended. Mark Mark E. Battersby may be contacted via e-mail to michele@ worldwidedrillingresource.com
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