Q I'm considering filing for Chapter 11 bankruptcy. Can I pay back the loans from my friends and family in full?

Name withheld

Unlike cell phone plans, the bankruptcy courts won't make special allowances for your nearest and dearest. The "liquid" in liquidation doesn't refer to blood. Not that Chapter 11 requires liquidation of a company's assets--that's Chapter 7, and it generally spells corporate demise. Chapter 11, by contrast, is surgery from which you are expected to recover. Under Chapter 11, your company continues to operate under protection while you devise a reorganization strategy and cost-cutting measures. You then submit a repayment plan to the court and disclose all assets and liabilities. If the majority of your creditors give the thumbs-up, the plan is approved. (The court can approve a plan even if the creditors don't, but that seldom happens.)

While family may be first in your heart, secured creditors such as banks are usually first in line to collect, explains James Shein, a professor at Northwestern University who specializes in turnarounds. Next come creditors that issue unsecured debt, such as credit card companies, as well as family and friends. But even within that category loved ones don't get preferential treatment. You can't say to Visa, "I can only afford to pay 10 cents on the dollar," then turn around and reimburse Cousin Clifford in full. You can, however, offer family and friends an equity stake instead of cash, suggests Shein. That leaves more money for the credit card companies, whose abiding affection for you may not extend to joining you in the long slog back to solvency.

Regardless of whom you pay and how much you pay them, be sure to nail down the specifics before approaching the court. The new Bankruptcy Abuse Prevention and Consumer Protection Act is intolerant of requests for extensions. If you don't submit a reorganization plan within 18 months of filing for Chapter 11, your creditors can propose one for you. And unless those creditors love you like a daughter or brother or nephew, chances are you won't like it.

Q Should I be one of the first in my industry to offer podcasts, or should I wait to see if they develop into a legitimate form of marketing?

Brant Bukowsky, ShowMe Tickets
Columbia, Ill.

Offering digital content is a bit like wearing Speedos: Everyone can but not everyone should. Podcasts may attract customers with their novelty and utility. But if the digital audio files you post on your website have nothing smart, informative, or entertaining to say, you're wasting listeners' time. And they won't thank your company for that.

"You need a compelling reason to launch a podcast," says Rich Brooks, president of Flyte New Media, an Internet marketing and Web development company based in Portland, Maine. That means a topic that is relevant to your customers and rich enough to produce fodder for weekly postings of 10 to 30 minutes each. Brooks, for example, uses his own podcast to advise small businesses on establishing a Web presence. An online ticket store like yours might profile artists currently on tour.

You also need time and money to devote to high-quality podcasts--technologically sophisticated consumers don't award points for showing up. David Topper, CEO of Goosecross Cellars, a Napa Valley winery, spent about 45 hours and $5,000 producing his company's first five podcasts. (He expects to reduce that by half now that he's gotten the hang of it.) Goosecross uses the technology for product-selection updates as well as virtual wine tastings: Visitors download files from the Goosecross site or from the online directories Podfeed.net and Podcast.net, which post them for free. People with desktop music software, such as iTunes, can also subscribe. Since November, more than 25,000 of the podcasts have been downloaded.

As far as Topper is concerned, Goosecross is benefiting from early adoption of the technology. "By learning about this early, we get ahead of the curve and compete with those companies that are better funded than us," he says. And if novelty sparks excitement, legitimacy evokes yawns, so waiting too long for road-test results may be counterproductive. After all, it took time to figure out whether blogs could be effective marketing tools, but that didn't stop companies from experimenting with them. Still, it takes much less time and money to experiment with a blog. So for now, you may want to make podcasts a small part of your marketing budget.


For more information on bankruptcy, visit the U.S. courts website, which features detailed instructions and downloadable forms. To learn more about producing podcasts, go to Podcast411.com, which includes tutorials and software recommendations; also check out the online directories Podcast.net and Podfeed.net.

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