So I was at first relieved to know that others were going to help us to meet our IRS obligations. At the time, we had a board of directors of 7 individuals. They had informed me that they would take charge of the situation. I awaited their brilliance.
They decided to cut everyone’s pay by 20%. They decided to pay themselves instead of paying the IRS. And they decided to tell the IRS that this was problem was caused solely by me. Finally, their plan appeared to include taking the firm into bankruptcy.
I realized that this plan was a plan that would hang the entire IRS debt on me personally. Additionally, I would be responsible for the line of credit with the bank and several equipment leases which I guaranteed. And it would destroy what we had worked 5 years to save. It felt like complete betrayal.
I now understood the fallacy of having on the board of directors individuals with little to no financial stake in the firm. I understand skin in the game. I understand pay to play. The people making this decision had nothing personally to lose if the company went under. So no wonder they did not worry about preserving equity or paying back creditors.
One key board member was out of pocket. The board member that controlled about 50% of the stock. What did he think? Was this a good plan? The future of the company and myself personally depended on his viewpoint on matters. The week waiting for his return seemed to take a year.
Thankfully, my longtime partner agreed that this was a bad plan. We met with the IRS agent and negotiated a payment schedule. And we had to reduce the firm size by 50%, but we restored full salaries. People cannot live on 80% of their salary. It is better to keep fewer people but pay them a living wage.
Philip Wanke, who is the “W” in BWM, understood what we had been through. He understood what we were trying to achieve. He understood that only he and I had the determination, willpower, and resourcefulness to survive. He did not feel that I had been deceptive or purposefully reckless. He understood that I was trying to select the best option available where there were only bad options, and he fully understood the reasons why we were in that predicament to begin with.
We had a new monkey on our back, but we were still alive and the debts remained the responsibility of the company. There still was a company.
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