Liabilities Exceeded Assets Case Study

Client’s liabilities exceeded assets.

Client was insolvent.

Smith Schafer Approach

Informal troubled debt restructuring. We reviewed clients list of vendors and selected the largest 25 accounts. We contacted vendors to explain clients situation and to request acceptance of a discounted amount as settlement in full on the outstanding balance. These vendor’s accounts were several months in arrears. Those who chose to participate signed a simple document acknowledging partial payment as payment in full. 

Results

Fractional payments ranged from 20-50 percent of the original balance. Many of these vendors continued to sell to this company although some required COD terms. Client was able to reduce accounts payable by about $45,000 which allowed the company to become solvent and avoid bankruptcy.  

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Smith Schafer has provided second to none service and value to my business and personal accounts for over 30 years. Their expertise and knowledge are unmatched by any other accounting firm I have encountered over all these years.

The relationship we have built over the years with the staff at Smith Schafer & Associates is one that can never be replaced. They are quick with helping us figure anything out, always willing to pick up the phone and walk us through any problem we are having. Also they are just all so friendly and kind!

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Smith Schafer always provides great information for our business. They are thorough with our accounting and financial planning. We have leaned heavily on them with interpretation of the PPP Loan and COVID-19 planning. They have been instrumental in our success and are always very knowledgeable and quick to respond to any of our questions."

Smith Schafer has provided second to none service and value to my business and personal accounts for over 30 years. Their expertise and knowledge are unmatched by any other accounting firm I have encountered over all these years."

The relationship we have built over the years with the staff at Smith Schafer is one that can never be replaced. They are quick with helping us figure anything out, always willing to pick up the phone and walk us through any problem we are having. Also they are just all so friendly and kind!"

We love our CPA team at Smith Schafer. They have helped us navigate many personal and business decisions."

Smith Schafer is very dedicated to their clients and always has their best interests in mind. They are very knowledgeable and thinking ahead to what the clients may be needing in the future. We would highly recommend Smith Schafer to our family and friends."

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