The Coming Corona Recession: Five Recommendations to Businesses for Getting Help


By: Donald L Swanson

Ultimate effects of the corona pandemic will be somewhere between the Black Plague and Y2K. We are all hoping for the latter, while many predict something closer to the former.

The Corona Recession

Meanwhile, this much seems certain: economic fallout from the coronavirus will leave many formerly-successful businesses in financial stress. Let’s call them “impaired businesses.”

  • Just think, for example, of businesses directly dependent upon sporting events or upon gatherings (large or small) or upon vacationers or upon schools in session. And then think of businesses who are dependent upon them. All will be impaired.

Recommendations for impaired businesses

Here are five things that impaired businesses should consider for getting help in their time of need.


Hire a professional with expertise in managing financial stress. Note: I did not say, “Hire a bankruptcy attorney.” A financial stress expert and a bankruptcy attorney are likely to be one and the same person. The difference is this: a bankruptcy attorney is hired to file a bankruptcy, while a financial stress expert is hired to avoid bankruptcy if possible. Avoiding bankruptcy is what’s needed.


Don’t confuse corporate general counsel with a financial stress expert. They are not the same. Today’s financial troubles require specialized knowledge and extensive experience in dealing with financial stress and related legal issues. A financial stress expert will have spent a career doing just that. Anyone who boasts of anything less is not what’s needed.


A corollary to the first and second recommendations is this: keep your head out of the sand.

Here’s what commonly happens: a business avoids hiring a financial stress expert until it has no choice but to hire a bankruptcy attorney. This is a grave head-in-the-sand mistake. Here’s how the mistake works out in the end: the business’s general corporate counsel makes an urgent/desperate call to a bankruptcy attorney asking, “How soon can you get a bankruptcy filed?” This question can have but one answer from the bankruptcy attorney: “You should have called a long time ago, when there was still time to develop a strategy and a plan!”


A financial stress expert will have a mediation-ish bent. Financial stress experts and experienced bankruptcy attorneys have this in common: they are all good at negotiating settlements, among multiple competing parties, to maximize value. That’s because financial stress issues must be solved quickly—or there won’t be any value for creditors to fight over. I call this a mediation-ish bent. This is what impaired businesses need.


The involvement of a financial stress expert will not always be disclosed to creditors. It is common for financial stress experts to remain in the background—unknown to creditors. That’s because, when creditors know a bankruptcy-type attorney is involved, some will shut down and stop working with the impaired business. Knowing when to step into the limelight, and when to remain in the background, is one of the critical judgments that a financial stress expert must make. Erring on this issue can have seriously-detrimental results for the impaired business.


During this corona pandemic, we are all hoping for the best while preparing for the worst.

Part of the worst is likely to be an economic recession for many businesses who are impaired by current circumstances. We need to be preparing for that as well.

**If you’d like to discuss these recommendations, please give me a call at 402-343-3726.

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