As managing partner of GGG and the Turnaround Authority, I get the pleasure of providing guest posts by our other partners. The following post is by our newest Partner, Vic Taglia.

We wrote a few weeks ago about when to hire a turnaround consultant.  The same answer applies here:  Sooner, rather than later – and there are good reasons for this.

First of all, a good insolvency attorney has seen it all. In some ways seeing him is like going to confession. You tell him your problems, he says it’s okay, he’s seen this before and he can help you. This only works if you see your financial advisor before your business is dead. You will be surprised how much better you sleep after engaging these experts, just like sleeping with a clear conscience.

On the other hand, if you wait too long, all you will see is St. Peter at the gate directing you to the lower floor.

Here are some key benefits of calling:

1. If you wait too long to see an insolvency attorney, you will only find the bankruptcy judge converting your case to a liquidation. Like St. Peter, bankruptcy judges have a sense of equity, can make quick judgments based on their extensive experience, and are rarely overturned.

2. If you see an insolvency attorney soon enough, he can help you find a financial advisor who can help restructure your business before the situation becomes deadly.  (Of course, I recommend you find a turnaround consultant even earlier than the attorney so you can avoid this problem entirely.)

3. A respected insolvency attorney can help you with your creditors, particularly if the creditors’ lawyers are calling, writing, or threatening you.  The other side recognizes that you have faced the severity of your problems and called in an expert.

A respected turnaround financial consultant can help you here, too. The other side (the bank’s special asset department or the creditors’ lawyer) are specialists, and they recognize your hiring a specialist as a good sign. This can save time, because both sides talk the same talk. Saving time in this situation can help save your business.

4. Engaging an insolvency attorney and financial consultant sooner rather than later can also speed you through a “prepackaged” bankruptcy filing. The Wall Street Journal recently reported that prepackaged filings have become more common in the past few years because they enable the various stakeholders—unsecured lenders, senior lenders, employees, equity holders and other parties—to negotiate early and to see what they will receive. The Bankruptcy Court then applies its imprimatur to the reorganization plan and business goes on, avoiding the significant delay and cost which would stem from settling contested matters in court.

5. Early consultation with expert insolvency counsel can put your mind at ease. Insolvency attorneys can tell you what your creditors can and, just as importantly, cannot do. They might be able to minimize your personal liability to your creditors and help structure your affairs to maximize your control of the future.

Insolvency, bankruptcy and debtor rights form a specialized part of business and law. The most effective lawyers and financial advisors here have become expert in these matters. The people who specialize in this high pressure, high stakes part of American business are generally smart, hard working and relentless. Isn’t that who you want on your team when your very survival is at stake?

Have you ever been through insolvency filings or consulted an insolvency attorney? What were your experiences?