Yes, a business filing for bankruptcy will need an equipment appraisal eventually, but if you find yourself considering bankruptcy proceedings--whether your business is agricultural, a manufacturing plant, factory, construction or excavating business, or a specialty production shop--do yourself a favor and talk to a bankruptcy attorney before you call an equipment appraiser.
Business owners considering bankruptcy owe it to themselves to get in touch early in the process with a good Bankruptcy Attorney. Many Bankruptcy Attorneys report that most of the clients they represent in Chapter 7, Chapter 11 or Chapter 13 cases have waited too long before calling for legal advice. Trying to delay or avoid an actual bankruptcy, some folks have already borrowed money from relatives and friends, run their charge cards up to the limit to keep their businesses going, cashed out or borrowed against the funds in their retirement plans, and - in some cases - sold the business' machinery and equipment, often at lower than market prices, often not realizing that in some business bankruptcies, they might have been able to retain enough equipment to continue to operate a restructured company. Ouch!
None of these options would be recommended by a Bankruptcy Attorney. In fact, many of these actions could result in a business owner actually losing some of the benefits from a bankruptcy filing. It's even possible that someone could be disqualified altogether from filing bankruptcy in certain situations, according to some Bankruptcy Attorneys.
One action your Bankruptcy Attorney will advise is getting in touch with an accredited, certified equipment appraiser. Your attorney will advise you on the timing; in the meantime, be aware that you will need to pay your equipment appraiser for the USPAP report you'll need.
Many folks, when going into a bankruptcy, have put aside enough money to pay legal fees. Remember that there will also be appraisal fees & put aside enough money for that as well. Don't find yourself in the position more than one business has been in -- trying to arrange a bankruptcy equipment appraisal long after all cash reserves have been depleted trying to keep the business solvent. Not being able to afford the few thousand dollars for an appraisal meant that the bankruptcy proceedings were disrupted and delayed.
If you are not certain how much an equipment appraisal might cost you, get together an equipment list and submit it to a qualified equipment appraiser for a quote. Be clear about why you are calling. Visit the American Society of Appraisers to find a local Accredited Senior Appraiser, specializing in Machinery and Equipment, who should be able to give you a rough idea of what your bankruptcy equipment appraisal will cost.
Don't take any chances if you are starting to consider a bankruptcy for your business; get good legal advise as soon as you realize that bankruptcy might be an option for you and be sure to put away the cost not only for legal council but also for a qualified USPAP equipment appraisal.
'Jack Young, ASA, CPA, is an Accredited Senior Appraiser (ASA) of the American Society of Appraisers specializing in machinery and equipment and has a Graduate Personal Property Appraiser (GPPA) designation from the National Auctioneers Association. Jack is the Co-Discipline Director of the Machinery and Technical Specialties Committee and the Chapter Secretary of the Northern California Chapter of the ASA.
For more information on machinery and equipment appraisals, visit NorCal Valuation. For more articles on equipment appraisal, you can click on the "Jack's Blog" link on the NorCal Valuation homepage: http://www.norcalvaluation.com/
By Jack P. Young
