How Can This Be Good: Two More Banks Fail, Bankruptcies At New Highs, Commercial Loans Ready To Implode

If you have followed this blog you know I am a fan of Bill Bartmann. He is a rags to billionaire riches  story and most of his wealth came during an economic climate similar but actually less serious than what we are facing today.  I follow Bill because he deals in reality and looks for the opportunity in what other see as a disaster.

This email I received from highlights some startling fact about our economy.  Personally I some direct experience with our financial institution industry and if anything Bill may be understating the pending failures.  As for the opportunity Bill suggests, that is up to you. I am not an affiliate, I am not paid to publish this on my blog, I make no money from sharing this with you.  I feel Bill is on the mark and come to your own conclusions.

I have been on several of Bill’s calls and I have studied his book Bailout Riches which I highly recommend if you have an interest in the details of how this works.  If you are intrigued you now have the information on the next steps.

Steve Pohlit

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On Friday, FDIC shut down two more banks – which will have billions in losses.

The bank failure total for the year is now 95 and includes three of the largest and most troubled — Guaranty Bank in Austin, Colonial Bank in Birmingham and Corus in Chicago.

We project the number will top 1,000 over the next year and a half.   The majority of the banks that will fail are Community Banks and Regional Banks where the impact will devastate entire communities.  The FDIC is running  out of money and will soon have to tap taxpayers – only the second time in the 75 year history of the FDIC that it had to do so.

Personal bankruptcies will hit a record 1.4 million this year.

Business bankruptcies are 250% over their previous high – and rising.

Unemployment is at 9.7 – heading for 10%   (Department of Labor says real unemployment rate is 16%).

Credit Card charge-offs are at 10.5% and Moody’s predicts they will go to 12%.

Mortgage foreclosures and “walk-aways” continue at record pace.

Any discussion of the Recession ending and the recovery beginning are based on wishful thinking, while ignoring the brutal facts.

The Commercial Real Estate market is about to implode the same way “sub-prime residential real estate” did two years ago. The economic impact of this implosion will compound every category mentioned above which will result in increased bank failures, increase personal and business bankruptcies, higher unemployment, higher credit card and mortgage default.

Sounds terrible, doesn’t it?

OPPORTUNITYWell, it is terrible – but it is also some of the best news you could ask to hear!

Why?  Because the last time I saw this environment, I made $5 billion just picking up the pieces of all those credit defaults and failed banks and by helping good banks dispose of their bad loans.

Now, a $5 billion net worth may sound unbelievable.  I assure you it was real and I was not the only person who made a lot of money helping all those consumers put their lives back together and helping the government and the banks solve those problems.  That is how big the opportunity was 20 years ago.

Guess what?  We are back in that same situation again today!  Banks are failing left and right.  Bad loans are everywhere you look.  The US Treasury and the FDIC are looking for people like you and me to help solve this problem.  Just this past week the FDIC closed on the very first tranaction under the Legacy Loan Program.  The Legacy Loan Program allows a generous leverage that magnifies the return for the Investor.
This first transaction under the Legacy Loan Program was a pool of residential real estate loans.  Now, I have no interest in real estate and neither should you.  But, first comes the real estate and then comes everything else and that is where the great opportunities are.
Those of us who participate and take advantage of this program could potentially make millions of dollars. T

he Legacy Loan Program not only makes a tremendous amount of loans available for purchase at a steep discount to true value, they it provides a government funding source.

The Legacy Loan Program is not the end of the good news and the great opportunities.  The market is rapidly filling with charged off loans available for purchase at very steep discount from banks that have not failed — banks like Chase, US Bank, Bank of America, Citibank, Wells Fargo and all the other names you have known for years.

Here is your chance to get a piece of the “Bailout!”

Here is your chance to take advantage of what will be a “once in a lifetime opportunity.”

Finally, a Bailout Plan that is aimed at all of us on “Main Street” instead of those fat cats on “Wall Street.”

It gets even better than that.  I am offering my students a chance to become a full-fledged business partner with me in this industry.   Bill Bartmann

Join me and Larry Genkin, Creator of the Thought Leadership Marketing Methodology, as I explain how we (you and me) can take advantage of this wonderful opportunity.
This one-hour teleseminar is scheduled for 7:00 pm – Central (8:00 pm Eastern, 6:00 pm Mountain, 5:00 pm Pacific) on Wednesday, September 23, 2009.

Click Here to register for this teleseminar.


Click Here to convert the call to your local time zone.

See you then,


Bill Bartmann

The General Motors Bankruptcy: A Costly Solution

When a company cannot move forward with profitable operations because of accumulated debt  meaning they are not in a positive cash flow position, they must close the business and restructure. Either solution is costly. Restructuring with the protection of Chapter 11 of the US Bankruptcy code adds to the costs. 

The cost of restructuring is not because of the people working to restructure or the bankruptcy court. The costs are generally a result of mistakes in the past. General Motors has access to many of the best and brightest in the world.  With all this talent, they still managed to steer a company to bankruptcy.  That is sad.  How that happened will be guessed and reported on in many other articles and books. The purpose of this article is to give you a glimpse of what’s next. 

In GM’s case, there has been  an attempt  to negotiate a structure for moving forward prior to the filing.  An agreement was not reached.  It is my personal view from being close to a number of restructuring opportunities that in many instances a rational solution is ignored. When that happens it often is because most everybody negotiating is an employee of somebody. Consequently the number one item on the agenda is  “cover my ass.”

My turnaround and profit improvement work is often with privately held corporations where one or more people running the business are owners. Having held executive  management positions (employee) with large pubic and private companies and having the experience as a business owner, I can assure you there is a huge mindset difference.  The mindset of an owner is solution and action oriented. The mindset of an employee is “how do I get this done and protect my job”.  Of course there are exceptions and most would say my mindset has nearly always been that of an owner whether I was one or not.

If  your company is not growing revenue and profits,  if your company is not cash flow positive Click Here for more information about Turnaround Consulting Services for Business In Crisis 

Most of the restructuring of  GM led by the company’s respective employees and advisers  began prior to the bankruptcy filling p. Part of this included  the company saying to the US Government “bail us out since certainly baseball, apple pie and General Motors is protected by the US Constitution”  Our president (an employee who we hired) says OMG I can’t let the automobile industry crater. He and his subordinate employees throw a Hail Mary pass to fuel  the restructure with a lot of money…our money.  So the employees tell the owners of the money, the US citizens,  how it will be spent and the owners (us) just shrug and say “OK”.  

So the US Government steps in to the newly defined role of bailing out certain large companies and notice that the GM bailout did not avert a bankruptcy filing.  So the brain trusts that run our country decide to send billions of our money to a company that months later files bankruptcy.  Do such investments happen outside of Government bailouts? Of course.  Investment funds make decisions all the time that don’t turn out as planned. The difference is that they are not using taxpayers money.

Taxpayers’ money is not the only money at risk.  There are billions of dollars owed by GM that will never be paid back. The ripple effect of  radically changed business is huge. Thousands of companies linked to the GM supply chain will go out of business or already have, since GM will cram down the money owed these unsecured creditors.  They won’t be paid and they won’t have business fast enough to replace that lost. Of course the direct and indirect job loss is enormous.  Again, don’t blame the restructure plan or the bankruptcy process. This situation is a result of how this company has been managed for decades.

The bankruptcy is necessary since not enough people agree on the latest restructuring  plan promised to move GM to the land of profitability. So GM executives, advisers and others to benefit  we will carve out a deal using the protection of Chapter 11 of  the US Bankruptcy Code.  This is a federal law designed to offer companies the opportunity to restructure and move forward profitably. Great idea except there are a few things you may want to consider:

Who pays for the bankruptcy filing?

Who always get paid during a bankruptcy?

Where is management’s attention during a bankruptcy particularly during the early phases of uncertainty?


The administrative (accounting, lawyer, trustee) fees associated with any bankruptcy are enormous and the people who are owed money prior to the bankruptcy are the main contributors to paying these costs.  For example, if a secured creditor is owed $10 million dollars, when the bankruptcy reorganization is filed, they may be offered 30% of the balance paid out over time  depending on how much money is projected to be available . Think of a home mortgage.  A bank holding the mortgage is secured by the value of the home.  Normally that is good protection but if the bank loaned 110% of appraised value then the value dropped 30% the security does not cover the amount of the loan. It looks as if the bailout money given to GM is at high risk of not being paid back 100%.  Time will tell. Unsecured creditors are  not likely to  get anything in a bankruptcy or pennies on the dollar. 

The company pays for the costs of the bankruptcy process including filing fees, trustee fees, attorney fees and  accounting fees. Of course paying for these costs means that money cannot be used to pay debt or suppliers. These costs are normally much larger than most people imagine.  These fees are always paid. In some cases the court will require a reduction in fees charged but usually not.

A bankruptcy filing is very disruptive to normal business operations. The attention of management and ultimately many others is on what is happening with the case. This is particularly acute in high profile cases that are covered by the press like the GM case.

If  your company is not growing revenue and profits,  if your company is not cash flow positive Click Here for more information about Turnaround Consulting  Services for Business In Crisis 

Are Their Benefits To This Process?

The company’s regular business operations are protected while the case is active meaning creditors are not able to pursue lawsuits or size secured property.

A creditor’s committee will ultimately approve a reorganization plan. This plan is usually one with fewer assets than were in place before the filing since a lot of money will have been spent on bankruptcy related expenses. Generally the plan is similar to what the company wanted to do prior to the filing but had to file because people could not agree.  Seems like once a company is in bankruptcy, employees who work for creditors are more likely to agree to a reorganization plan since they can always represent “well this is the best we could do as the company is in bankruptcy.” 

Some company’s emerge successfully from this process and go on to restoring profitable growth. In General Motor’s case time will tell.  There seems to be structural costs that will not be resolved in this case which are the labor costs driven by the union. Retirement benefits are being publicized as being a concern. Ultimately the company will determine what it is able to afford and changes will have to be made. 

Ed Koch has been retained as the turnaround expert.  His firm is very reputable and he has a number of notable turnaround successes. The one thing no one can predict with certainty is to what extent customers will want the product the company makes. The public has many choices and there may be too much resistance to this brand long term for any plan to be viable.  

The media is already reporting the estimated impact of the bankruptcy on jobs and the economy. They are missing a key point. The impact is not from the bankruptcy. The impact is from how this company has been run in the past. The consistent implementation of a profit strategy has not been in place. From the outside looking in it seems the focus has been on preserving high paying  jobs and lucrative benefits while placing secondary priority on innovation and a profitable infrastructure. If those priorities remain during and following this bankruptcy, the company will not survive.


Sharing with all my readers the energy of peace, happiness and abundance

Steve Pohlit, The Profit Expert

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Fear of Failure, Recession, Bankruptcy … More: The Law of Attraction Is Always Working

Are you one of the hundreds of millions who check the papers, TV, radio or Internet to see how things are going?  Do you decide on how you are feeling by what you read or others talk about?  Do you think the information we receive about our economy, the world, our health, our relationships is the truth or someone’s opinion of reality?

Recently a friend invited me to a restaurant for diner and the owner introduced himself and his wife. His name is Richard.  Richard discovered,  because he asked, that I had some experience with business.  He wondered what I felt about our economy. I said that I didn’t understand why so many perfectly intelligent people decided they were agreeing we were in a recession.  A few reporters decided some numbers suggested that and all of a sudden an entire nation is feeling bad.

I relayed some of my experiences.  I have worked with companies struggling in what reporters labeled boom times. I have also worked with companies doing extremely well in periods labeled as declining, recessionary and so on.  I feel the difference in doing well and not doing well is what we think about, our experience managing changing circumstances and knowing when to request help.

My firm International Resources ( is successful helping companies large and small improve business performance. Nothing is ever stagnant so we work with management so they are better prepared to benefit from positive trends as well as reverse negative one.  If you feel your business could be doing a lot better but you are not sure how to prioritize and structure your company for much higher profits, call me and let’s discuss it.  I am Steve Pohlit and my direct number is 727-587-7871.

If you think about those times when nothing seemed like it could go wrong, how did you feel?  Going deeper what did you think about?  Did your attention give rise to more success or not? In general, I would guess that the upward spiral continued and if you are not in that state now it is because you heard you should be doing worse and feeling bad.

Remember the downward slides?  Maybe you feel you are in one of them now.  You probably recognize that it is your mood that is making the biggest difference.  Look out around you. What do you see? Doom and gloom or prosperity? I feel you see what it is that you want to validate.  if you want to feel that many other people are enjoying their work and their lives, that is what you will see. You can also experience the reverse.

The mood of lenders is restrictive. The mood of  many business leaders is cautious. There is no upside to a corporate or financial institution employee taking any risks right now. Yet the economics of many deals have never been better. There is little or no upside to a reporter publishing any positive economic news. Sensational negative news sells.  Why is that?  I don’t know but if it didn’t sell well it wouldn’t dominate the newspapers and media.

Do you want the recession to be over?  Then declare it is over.  If we don’t stop this insane attitude, we will continue to get more of what we focus on. That is the Law of Attraction.  “The only thing to fear is fear itself” That a famous historical quote. President Roosevelt knew that fear is a powerful emotion that attracts negative results.

Who do you know that sets a great example on a balanced attitude regardless of published economic trends? One of my favorites is Warren Buffet.  He has the long term view and recognizes there can be periods of time that don’t yield the same results as others. He is one of the wealthiest men in the world and goes to work every day because he loves what he does.  I admire his attitude and learn from him and others like him.

So if you have read this far I ask what are you going to do different starting now?  Are you going to stop buying the doom and gloom stories?  Are you going to start developing a stronger and consistent prosperity attitude.  Join me in that mindset, posture and related actions. James Allen wrote “As A Man Thinketh” We move in the direction of our current dominant thought. What direction do you want to move in?  Take your attitude temperature and depending on the reading you can predict where your company, job, finances and relationships are headed. It is all up to you just as it is all  up to me what happens in my life.  When more of us get that, not only will any doom or gloom be over but it won’t happen again.

Sending all my readers the energy of wellness, peace and abundance.

Steve Pohlit

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Steve is the President of International Business Consulting Resources. His firm specializes in guiding companies to rapid increases in revenue and profits with a sustainable growth rate. Don’t miss my FREE Report: How To Make More Money With Your Business Now and Long Term I am building my practice and welcome new client inquiries. Call me for a fee consultation at 727-587-7871 Remember many of my business building articles can be found at Steve Reports and my prosperity building tool (best tool ever for helping you manifest your goals and dreams) is The Prosperity Tool Chest and guiding articles posted very often at Prosperity Tip

The Exact Steps Required To Turnaround A Business That Is Cash Flow Negative (In Trouble)

I have led companies in the retail, real estate, transportation and restaurant industries from  near catastrophe to stability and profitable growth. Companies find themselves in a dire straits position for a multiple of reasons when the economy is strong as well as weak … more so when weak.

The current business climate is tenuous and an increasing number of businesses find themselves in a profit and cash flow crunch. If you or someone you know is in that position, time is of the essence. Literally every hour that passes is critical when a company’s profit and cash flow are on a downward trend. The faster action is taken to restore the business to a positive cash flow position, the more likely it can be further strengthened to renewed profitable growth.

The following steps are the major ones that I have guided clients through who have been in this situation:

1. Stop issuing checks until Step 2 and Step 3 are completed. The exception would be payroll and any utilities if you are at the point of being shut off if the bill is not paid. If you have a trucking company you have to buy fuel. If you are a restaurant you have to buy food. If you don’t have the funds to pay “life support costs and expenses” there are still options but they would have to be addressed on a case by case basis. You want to avoid getting to the point of not being able to pay the must have expenses.  There is a wide variation of the definition of must have items. The clients I have helped were very surprised at the literal definition of “must haves” but they thanked me later.

2. Be certain as to your exact cash and liquidity position. You need a very accurate snapshot of the free cash in your bank account, the quality of accounts receivables and a precise accounts payable listing that includes all invoices. You would be surprised as to how many companies do not know their actual cash position, ignore problems in their accounts receivable balances and forget that oftentimes there are bills sitting in unopened mail and desk drawers.

3. Develop an eight week cash receipts and disbursements forecast and don’t leave one cent off of the disbursements list. If you are not sure how to do this, there is an example at 10 Minute MBA This is a core schedule that I implement with all clients and is very valuable when used properly.

4. Document an organization chart with each person’s position and compensation.

5. If the business sells a physical product, it is important to evaluate the inventory. You cannot sell what you don’t have and you can’t replenish inventory if vendors have shut you off.

6. If there are debt agreements in place understand all debt compliance covenants.

7. Identify all critical support functions. For example, the company’s internet connection, maintenance agreements on machinery and equipment and key licensing agreements if any.

The goal is to have an accurate picture of all the facts no matter how dismal they are. I can’t tell you how many times I have been blind sided by additional pieces of information that were very important in finalizing the turnaround plan.

What Actions Are Typically Taken Once There Is An Accurate Picture of Situation?

1. Cut all non- essential spending and payroll.

2. Implement a temporary reduction in pay for as many people as possible. That is always difficult and may be impractical if there is a union or a large hourly workforce. Every situation is different but normally payroll has to be cut and it is often delegated to the outside consultant to handle.

Note: many of these steps are implemented quickly. Even while the entire picture is still being developed. That is where experience with these situations is very valuable. Experts with turnaround experience know how and where to act fast.

3. With people you want to take the action one time and then meet with those that remain and explain to them what is going on and how it is going to be fixed.

4. Vendors on the accounts payable list will need to be called and given a date when they can expect a workout plan. This is not fun work even for an expert consultant. However, whatever needs to be done to save the business and restore profitability should be addressed.

5. If there is a sales staff, look to move those people to full commission status and if possible add to the staff with full commission as the compensation package. Be careful if out of pocket expenses are paid. They have to be limited and per diems in place.

6. Assign clear accountability for collecting receivables and put in place a three step collection process. In certain cases discounts are negotiated for paying early.

Notice all the emphasis at this point is on cutting expenses and build cash once that process is in place then

Work on your building business and profits plan. Make sure it is realistic and focused on the next 90-180 days. When that is drafted including the financial projections you are now in a position to negotiate with bank debt holders, capital equipment lease venders and other long term lease agreements in place.

Some clients may need to file for chapter 11 reorganization. This should be avoided at all costs since it is very expensive, time consuming and a major distraction. However sometimes it is the only available option other than shutting your doors. Chapter 11 is usually the best answer where selling assets, selling the business or parts of the business is part of the the turnaround plan.

I hope this helps and while it addresses many points there are always more depending on the business. The following is right from my Turnaround Consulting Site

Do you worry about running out of cash?
Do most of your key vendors have you on COD?
Have checks issued by your business bounced?
Are revenue trends decreasing and accounts payable increasing?
Have any of your valued employees left for a “better opportunity”?
Are you spending all of your time fighting fires?
Do you wake up at night fearing you will be out of business?
Do you fear you will not have enough cash to meet your next payroll? What about the next?
Are you thinking or have been advised that a reorganization of your business under Chapter 11 of the US Bankruptcy code may be the answer?

“If You Answered Yes To More Than One of These Questions, Then You Need To Call Steve Pohlit at 727-587-7871 Right Now. That Is My Direct Line. I Will Personally Determine If I Can Help You Solve Your Business Problems or Refer You To Someone Who Can. This Call Will Cost You Nothing and May Well Save Your Company.”


There are two reasons why companies ask me for business consulting assistance:
1. They know what to do but want an independent third party experienced business development consultant to drive the process as that approach demonstrates management’s commitment to achieving the goals.
2. Management understands the need for improved performance and understands they do not have the experience to implement what is required.
3. There is actually a third reason and that is where a business is in a crises situation and turnaround business consulting procedures need to be implemented fast. Nobody likes that situation, even the consultant. However, many companies can be salvaged with the right action. Think of the what goes into action when a person has a heart attack. Timing and action are the differences between life and death.

Be Well and Prosper,
Steve Pohlit
Business Development Consulting

Steve Pohlit has more than 20 years experience running very large and medium sized companies. Steve consults with clients to design and implement processes that will deliver improved business performance for the long term. Learn more about the process of Increasing Profits by 30% or More In 90 Days or Less by visiting 10 Minute MBA or you can call 727-587-7871 and speak with Steve directly. Have a question? Click Here To Visit Ask The Consultant