Resolve Business Debt for Less
5 Factors Behind a Supportable Offer

Less than the balance requires more than the request. A creditor needs a reason inside the offer, not inside the owner's fatigue.

A supportable proposal connects payment capacity with the risks and costs of the alternatives. The business makes that connection through accurate records, without concealing assets or presenting uncertainty as a decided defense.

1. Document What the Business Can Perform

The forecast should separate collected cash from expected receipts before any figure is named. Money in hand supports a different promise than proceeds from a customer invoice or an asset sale, and the payment date should reflect the distinction.

The proposed contribution must come from funds the business can release without undermining payroll, taxes or the suppliers required to keep trading. If the offer depends on a customer paying an invoice, name and quantify the uncertainty before promising a fixed transfer date. What the business pays, or preserves, in the next quarter decides which offers remain credible.

Simply state the proposed amount and its source alongside the supporting records. A creditor can evaluate a documented constraint; an unexplained demand for a large discount gives it nothing to evaluate. The proposal may rest on ninety days of statements and one payroll register, and the register should agree with the bank records before either reaches the creditor.

A documented constraint is extremely persuasive to a creditor comparing options. The balance the creditor claims and the balance the records support are different numbers.

2. Understand What the Creditor Compares

The counterparty weighs enforceability, collateral, guarantees and the time required to recover through other routes, which run longer than any owner budgets. A deficiency pursued against the guarantor may outlive the defenses available to the company, which is why the guarantee requires its own assessment. Rarely does a creditor accept the first figure.

A creditor may press for judgment in order to fix its place among competing claims, and the owner who ignores that motive misreads every deadline on the calendar. Where a security interest touches receivables or equipment, the New York statute on liens after disposition continues the interest unless the secured party authorized a free and clear transfer (at least where New York law governs the account; counsel elsewhere applies the local rule), so counsel should confirm what survives a sale before the offer treats the assets as unencumbered.

Evidence makes an offer supportable. Acceptance remains a separate decision no document can compel. That, in the end, is the entire negotiation: capacity against alternative, documented. The remaining sections address how each half of that equation is proved.

Exceptions exist, though the files that reach negotiation seldom contain them. An undocumented promise proves extremely fragile after the first missed date. Do not threaten a defense that has not been assessed.

3. Present the MCA Position With Care

The New York appellate analysis of MCA repayment informs counsel where the law applies, though the existence of a clause alone decides nothing about enforceability.

A hardship letter without statements works the way an umbrella works in a stairwell: correctly shaped, entirely misplaced. The records should show whether payments moved with revenue, whether adjustments were requested and what the provider answered, since reconciliation, finite term and bankruptcy recourse are the factors a court examines. The statements contradict the claimed balance in something like half of these matters, though no published census confirms the proportion.

A funder that has never reconciled has already told you how it reads its own contract. Do not assume the provider lacks evidence because its representative has not supplied it during a telephone call. Counsel should ensure the position is accurate and ensure no deadline passes while the offer is pending. I have yet to see a percentage discount survive contact with the actual statements.

Whether the court would read the file the same way remains the question no offer can resolve.

4. Put the Offer Beside the Tax Result

A forgiven balance can produce taxable income, subject to exclusions that turn on facts outside the settlement file. Bankruptcy and insolvency exclusions carry requirements of their own, and entity structure with tax classification shapes the result.

The IRS note on canceled debt states the general rule, though no settlement company can supply the facts an exclusion requires. Confirm the tax treatment before the offer is funded. Most owners first meet the tax question after the funds have moved. I understand why the reading waited.

5. Consider Delancey Street Before Committing Funds

There is a particular quiet in a ledger reviewed in January, when the prior year has closed and the debits have not. The review that follows should be patient to the point of tedium, since optimism in the forecast becomes someone else's exhibit.

Delancey Street offers a free confidential initial review of MCA distress and coordinates legal matters with independently licensed counsel. It is a debt settlement company, not a law firm, and the offer should name the amount, identify the source, and explain the conditions that could move the payment date.

Resist the urge to promise every receipt, even briefly, before counsel has reviewed and tested the forecast, though the funder will treat the promise as final. The business was solvent. The schedule was impossible. That contradiction is common, and only a tested forecast separates available cash from expected receipts.

The Delancey Street outline of its settlement review gives the owner a place to test the offer before the request becomes the agreement. The creditor can refuse any proposal, for reasons of policy, of asset reading, and whether facts exist that the file has not yet disclosed. That refusal is also information, and the next offer should be built from it.