Before Filing Business Bankruptcy, There’s a 90-Day Rule You Should Know (1)
                     FINANCING 
RESOURCES
The 90-Day Window: What To Do 
Before Filing Business 
Bankruptcy
Russell Slappey
The 90 days before a bankruptcy ling determine how much control you keep. Use this window to stabilize cash, 
clean your
 nancial records, avoid preferential payments, align with experienced counsel and a fractional CFO and 
prepare a realistic recovery plan. Businesses that act early preserve options. Those that delay lose 
leverage.
The 90 days before ling are reviewed by U.S. bankruptcy courts to assess fairness, transparency and intent. 
What happens in this window directly affects control, cost and outcomes.
Why the 90 days before filing matter more than most 
owners realize
Bankruptcy does not start when papers are led. It starts months earlier, when transactions, payments and 
decisions are quietly logged and later reviewed.
Courts and trustees examine what happened in the period leading up to a ling. Incomplete nancials, rushed 
payments or undocumented transfers can be questioned, reversed or challenged. That scrutiny often 
determines whether a case moves smoothly or becomes expensive and restrictive.
The difference between an orderly restructuring and a forced liquidation is often what happened in these 90 
days.
At Nperspective, this window is treated as a strategic phase, not a legal formality. When approached correctly, it 
gives owners time to slow the chaos and regain decision-making control.
The real objective during these 90 days
The goal is not to “prepare for 
bankruptcy.” The goal is to 
protect options.
That means:
Knowing exactly where the business stands 
nancially Avoiding actions that increase 
legal exposure Preserving credibility with 
courts, creditors and advisors
Creating a realistic path forward, whether 
through reorganization or an orderly exit
Owners who treat this period as an operational 
reset tend to fare far better than those who wait 
until cash is gone.
Days 1–30: Stabilize and see the truth 
clearly
The rst month is about visibility. Not optimism. 
Not fear. Just facts.
Cash must be understood daily. Bank balances, near-term obligations and payroll timing should be visible on one 
page. This is not the time for complex reporting. It is the time for accuracy.
Financial records need to be reconciled for the prior twelve months. Pro t and loss statements, balance sheets, 
bank statements, accounts receivable and accounts payable should match reality. If they do not, that gap 
must be closed now, not during a court ling.
Discretionary payments should pause. Payroll, insurance and critical operating expenses continue. Large 
vendor paydowns or selective creditor payments should not occur without legal review.
This is where a fractional CFO brings immediate value. At NPerspective, this phase is about creating a veri ed 
nancial snapshot that can stand up to scrutiny later.
Days 31–60: Model scenarios and align legally
Once the numbers are clean, decisions become clearer.
A short-term cash forecast should be built, typically covering thirteen weeks. This allows leadership to see 
whether a restructuring, temporary funding or negotiated extensions could realistically avoid a ling.
At the same time, experienced bankruptcy counsel should be engaged. Legal and nancial strategy must 
move together. Preference exposure, lien positions and creditor hierarchies should be reviewed before 
conversations happen.
Targeted discussions with key creditors may begin during this period. These are not emotional conversations. 
They are factual and documented. In many cases, transparency supported by real data leads to extensions 
or temporary relief.
This alignment phase is where many businesses either regain leverage or con rm that ling is 
unavoidable. Both outcomes are acceptable. Uncertainty is not.
Days 61–90: Prepare to file with control and credibility
The nal month is about readiness. All schedules, asset lists, creditor summaries and supporting documents 
should be complete and accurate. Ownership records, contracts, leases, tax lings and employee information 
must be organized and accessible.
Any transactions that could raise concern should already be reviewed and documented. Surprises during ling 
create delays, higher costs and loss of trust.
Most importantly, a post- ling plan should exist. Whether the business will reorganize or wind down, 
leadership must know what the
 rst ninety days after ling look like.
In U.S. bankruptcy courts, including markets like Atlanta, lings that re ect preparation and documentation are 
consistently received more favorably than those driven by last-minute pressure or nancial panic.
This is the stage where NPerspective typically helps leadership articulate what stability and recovery look like 
on the other side.
Chapter 7 or Chapter 11: a practical distinction
Chapter 7 is a liquidation process. Operations usually stop and a trustee sells non-exempt assets. It is 
appropriate when there is no viable path forward.
Chapter 11 is a restructuring process. The business may continue operating while obligations are reorganized. 
It requires credible
 nancials, realistic forecasts and disciplined execution.
The right path depends on numbers, not hope. Modeling both outcomes as part of pre-bankruptcy planning 
reduces regret later.
Communication matters more than most expect
Silence creates fear. Over-sharing creates confusion.
Employees deserve clarity about what is known and what is not. Vendors and lenders should hear consistent 
facts, not speculation. Customers should experience stability wherever possible.
Every conversation should be documented. Consistency builds credibility and credibility matters in court.
Life after filing starts before filing
Businesses that recover fastest are those that plan early. Liquidity needs are identi ed in advance. Cost 
structures are reset with intention. Operations are simpli ed. Stakeholder trust is rebuilt through steady 
communication.
Bankruptcy is not the end of a business story. It is a structural reset. Whether that reset leads to recovery or 
closure depends largely on what happened in the ninety days before ling.
Key takeaway for owners considering bankruptcy
The 90-day window shapes legal risk, leverage 
and cost Clean nancials preserve credibility 
in court
Early planning protects more options than last-
minute ling
Frequently Asked Questions
Q1: What should a business stop doing before 
ling bankruptcy?
Businesses should avoid selective payments, undocumented transfers and rushed nancial decisions. 
Transactions in the 90 days before ling are reviewed by U.S. trustees and may be challenged if they 
appear preferential.
Q2: Can I pay vendors in the 90 days before ling bankruptcy?
Some payments may be permitted, but many can be considered preferential. Always review vendor or 
lender payments with bankruptcy counsel as part of a proper bankruptcy ling checklist.
Q3: Do I need clean nancial statements before ling bankruptcy?
Yes. Accurate nancial records are critical. Inconsistent or incomplete statements often increase scrutiny, 
delay pFraocceebeodoinkgs and Trweidttuecre exibilitLyin dkuedriInng restructuring or liquidation.
Q4: Should I hire a fractional CFO before ling bankruptcy?
A fractional CFO helps stabilize cash ow, prepare forecasts and organize records during business 
bankruptcy preparation. This improves credibility and decision-making before ling.
AQ5d: dIsi tCihoanpatelr  11 preparation better than Chapter 7?
INnost iaglwhatys. Chapter 11 allows restructuring, while Chapter 7 liquidates assets. The right choice depends on 
nancial viability, noTth e p9r0e-fDeareyn Wcein. dPorew-:b Wanhkartu tpot cDyo  planning clari es this. Why Private Equity Firms Rely on
Before Filing Business Bankruptcy  Fractional CFOs During Due 
Diligence
Q6: What records wReialld t Mhoere c »ourt review before ling? Read More »
Courts review nancial statements, bank activity, asset transfers, creditor payments, tax lings and ownership 
records. Preparation reduces challenges and surprises.
Final thought
If bankruptcy is on the table, waiting rarely improves the outcome. Start by producing a veri ed nancial 
snapshot. Engage experienced legal counsel. Work with a fractional CFO who understands both distress 
and recovery. Early 7a cBtuiosnin leimssi tSsc reisnka raionsd T hapt rDeesemrvaensd choice. That is how NPerspective approaches this 
 Part- Time CFO Expertise
phase — calmly, deliberately, and with the future in mind.
Read More »
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