We're a tiny biz in CA. We agreed to participate in a legal settlement. The amount owed is now due. We cannot pay it at this time although we sent a payment and will continue doing so until it is paid in full. We have yet to see a profit in 2017 and have debt. Other side's legal team is threatening to force us out of business or into mediation which would only incur more fees. We'd prefer not to claim bankruptcy but we simply cannot pay the amount due. How should we respond?
If you have not already done so, try talking with the attorney for the "other side" and advise of the company's general financial condition (without specifics) and assure them that you will continue whatever monthly payments you can afford. I also suggest you contact a certified specialist in bankruptcy law or an attorney in your area that specifically practices in bankruptcy law in order to understand bankruptcy options for the company. Many bankruptcy attorneys offer a half hour free consultation, as I do, and should evaluate all options for you (bankruptcy and non-bankruptcy).
Maybe you should consider a Chapter 11 bankruptcy. Otherwise, you will definitely be out of business. Best of luck.
