Last month, bankruptcy filings in Maine were down 50% from August of 2019, but that doesn’t mean we won’t see a bigger impact on small businesses before the year is out. In this Press Herald article, Andrew Helman discusses the impacts we’ll see as government assistance dries up, and why not all businesses can take advantage of the Chapter 11 reforms that went into place this year.
If another federal economic stimulus package doesn’t emerge, Helman foresees more business closures and a cascade effect of lost rent payments and property values.
“As government assistance dries up and commercial activity fails to return to the normal baseline before COVID-19, we will start to see impacts,” he said.
Even though the Chapter 11 reforms that went into place this year make it easier for small businesses to restructure and avoid going out of business, not all will be able to take advantage, Helman said.
Businesses with substantial assets, such as a wedding venue or summer camp, have assets that would provide the core value they would use to pay off debt and reorganize, Helman added. Small retailers and restaurants typically do not have the same assets, making bankruptcy less appealing, and spelling trouble for those sectors.
“I am concerned because there are many businesses that won’t be able to be saved, because they don’t have the assets to reorganize around,” he said.