The Los Angeles Bankruptcy Forum regrets that it cannot guarantee the quality of information, products or services referred to in the following article or in any article on the LABF web site. The founder is occupied with professional organizations, vacations, social engagements, and community obligations. A more professional style of management is needed, but the founder is unwilling to change. A business that is becoming troubled gives off early warnings. Astute, creative bankers who learn to recognize these danger signals in time can protect them-selves from severe losses and help the client to find effective remedies.
Bankers generally do a good job of screening a new business applicant for credit.
Experience helps them avoid companies that give any indications of probable default. The typical business, however, goes through a cycle of growth and decline and the banking relationship parallels this cycle. It may take these same bankers years to discover that an established client is in an advanced state of decline, unable to repay its loans. Consider the life cycle of a typical business. The entrepreneur begins by developing a product and some customer relations while still in school or working for an established company.