How to solve the problem of Debt for your Business in the Middle East?
It is a common story…a budding business starts off in excitement, anticipating a booming economy, or a new project. The project doesn’t materialize, or business slows dramatically, and picks up sporadically. Meanwhile, the businessman or woman’s debt continues to grow, while cheques continue to come due. Though business may be sustainable in the long run, the rate of checks issued is not aligned with the growth of the business. Therefore the business person is left with mounting debt, and often legal cases.
As the concept of bankruptcy is still fairly new in practice in this region, many people may be left confused as to what to do. In addition, many business people choose to remain in business in the Middle East, with a desire to press on. So what is the solution? Business ups and downs are a part of the economic fabric of the Middle East, and therefore waiting for a huge upturn to solve all your debt problems is not always realistic.
There are legal solutions however which can be of use.
Debt Restructuring
Many debtors avoid their creditors, for fear of confrontation or court action. However, it can be in their interest to approach their creditor to formulate a mutual agreement.
Oftentimes, mediation and reconciliation services can also be of use. However, what is of most use in such situations, are legal instruments available to restructure the debt, which can then be used in court at a later period. These instruments can also prevent a legal case and much expense.
In their crudest form, these instruments take the form of a fresh set of checks, issued against verbal promises made during informal discussions. This may be “re-assuring” for the creditor, but when the business cycle fluctuates again, both parties are often left with the same problems as before.
What is often not considered, or put into practice, except for more sophisticated organizations, are contractual arrangements to change the scope and implications of the debt.
For example, we have dealt with clients with whom we re-structured debt based on not only a new payment schedule, but also based on the disclosure of asset ownership and financial performance, tying debt resolution to such performance. Temporary joint or shared ownership of certain assets, such as business income, or income generating assets, has also been stipulated, until such time a debt is repaid. Such ownership is conditional, upon debt completion, and decision making power is mutual.
Such arrangements are not suited to all business people, so it is therefore important to tailor the approach to each person’s individual debt situation. A resolution before the court can then become a last resort, rather than a first course of action, if this tailored approach is taken.
In the Middle East, unresolved debt can have serious consequences such as travel bans, jail time and constant stress. Therefore, it is important to seriously consider the benefits of professionally and comprehensively managing your debt to avoid such problems. This is entirely possible, and our experts bring together our collective local and international experience to solve these matters for you.
In addition, as we understand that our clients are oftentimes financially constrained, our pricing structure is equitable and flexible, to ensure that the client’s needs are served completely, without incurring hefty legal fees.
Simply put, whether you’re big or small, we’re here to help!