For the past few months, my husband and I (and many other people we know and love) have been dealing with the fallout of a business collapse. And I’m not going to lie: this is one of the hardest things we have ever gone through.
Here’s what happened. We started our business in July 2008. It was a small corporation with two shareholders, my husband and his best friend, and the three of us were the board of directors. We just wanted some legal protection over our assets. In 2011 my husband felt that he should leave his full time job and work for the corporation full time. That fall and the next winter saw some drastic changes. We landed a client through an old friend, and they poured money into developing our business. In less than two years, they were 95% of our business and we were the size of 10% of their company – we had over 30 employees. That’s a pretty big percentage, and the owner took notice. They notified us that they were interested in acquiring our company. We thought that was a great idea.
After doing their homework on our company, they submitted their offer. They would take all our assets and employees, and we would get $5,000. Oh, and we got to keep all the liabilities, which were in excess of $600,000 – and that was just the known liabilities. We also would personally guarantee all work that had been done for them over the past two years.
We took that to mean they were opening negotiations with a ridiculously low offer to test our negotiating skills. We finished our own homework on the business, which meant consulting with two sets of lawyers, business consultants and accountants, and submitted a counteroffer with more appropriate terms.
They effectively said “NOPE!” They shut down negotiations and quit paying their bills.
Now, we had 30+ people working for us, and at least 28 of them worked on this client’s stuff solely. We had a pretty gigantic payroll and, to our shame, very little in savings compared to what we spent every month. So in three weeks we were out of money.
I have never seen my husband so stressed or working so hard. He lost thirty pounds over the course of all these shenanigans. In the three weeks between when we submitted our offer and when we ran out of money, he would throw up every morning before going to work. The best word to describe him was haunted. It was with many tears and heavy hearts that we let every employee go two weeks before Christmas.
There’s not much that feels worse than letting your friends and colleagues down like that.
Over the last three months we have traveled the roller coaster of dealing with the fallout. We had so many decisions to make. Can we re-hire this employee? Can we keep those clients? What happens to the office spaces we leased? How many more bills can come in that we didn’t know even existed?
Every loss after losing our employees wasn’t as bad, but they all hurt. One of the ones that hurt the most was losing our beloved office space. We sunk a lot of money and even more time into completely gutting and remodeling our main office. We got to occupy it for less time than it took to remodel it. And then we couldn’t pay the rent any more. Leaving it for the last time was heartbreaking, especially for my husband.
Now we are deciding what to do with the entity itself. It is a black hole of potential liabilities and continued debts, so at this point we are probably going to declare it insolvent and shut it down. Gosh, that’s hard to write. This company was our first baby. We poured so much into it, and now, thanks to some strangely hostile people with more money than we have, we will lose it entirely.