Work out a deal with creditors
In other words, set up a plan much as a bankruptcy trustee would do, and see if you can get creditors to accept it. No one wants to go to court necessarily, and creditors know that it will cost them if the debtor declares bankruptcy, so sometimes they are willing to settle for a "reasonable" percentage of what is owed to them. Of course, all it takes is one stubborn creditor to put the whole deal off, and the process is informal, and thus not binding on creditors.
Find New Sources of Cash
This sounds easier than it is. When a business is financially strapped, it is because there is little or no cash available, and it usually means that the company has borrowed up to its limit. But sometimes, you may be able to find additional cash by (a) selling unused assets, (b) cut-backs and layoffs, or (c) new sources, such as private lenders or higher-cost lending alternatives. Buying time with additional cash can hold off bankruptcy, at least temporarily.
Consider State Bankruptcy Processes
You may be able to use state law for a process called "assignment for the benefit of creditors" (or an "ABC"). This process is used for liquidation, and an "assignee" (similar to a trustee) is appointed to oversee the process. For private companies, an ABC might be a possibility.
If all else fails, you may be able to create a do-it-yourself bankruptcy without having to go to the costly and time-consuming process of a typical bankruptcy. In any case, trying these measures may at least buy you time, and time may be all you need.
Bank to Bankruptcy Overview
