Corporate bankruptcy is a chance for a company to get its act together, or it’s the last scene from the Titanic. Bankruptcy is not the end, as some brands can even come back from the grave to find a new incarnation; though often forcibly slimmed down but free of debts.
Sing this one to the tune of “Who’s Sorry Now?” Back in 2000, Netflix founder went to Blockbuster CEO John Antioco to propose a partnership. According to CNET, they were laughed out of the room. Blockbuster made a huge amount of profits by soaking their customers for late fees, Netflix charged a flat subscription fee, and customers could keep the movie as long as they wanted. By 2010, Blockbuster was bust for the second time and now exists – the irony – as VOD. The stores that once seemed to outnumber Starbucks went dark one by one, and only those relics from the 90s can remember what a late fee is.
Too many brands, changing consumer tastes, outmoded financial incentives, waiting too long to file bankruptcy, and being too over committed too late in the game for the truck boom of the early 2000s when the Recession hit, the reasons are myriad. Moreover, the company failed under the leadership of Rick Wagoner and Fritz Henderson, two Harvard MBAs from the finance division who stuck to old formulas that hampered competitiveness. The US bailed GM out to screams of protest that the taxpayers were being forced to shoulder the results of mismanagement, the US became the majority shareholder at 60 percent, along with Canada at 12 percent, and the UAW at $17 percent. GM has weathered a recent recall scandal and lawsuits, and opened up profitable sales with smaller, fuel efficient, greener cars.
They invented the digital camera way back in 1975, but after never missing a chance to miss a chance, Eastman Kodak ran out of Kodak Moments and filed for bankruptcy in 2012. Failing to adapt to changing consumer tastes and attempting to prolong the life of film sent the company into a decline. Bankruptcy was not the end, and the company’s reorganization was approved in September of 2013. Kodak emerged without the consumer camera, film, and photo developing and is focused instead on movie film stock, printing technology, and touchscreen sensors. The Wall Street Journal reported in November of 2014 that Kodak made a quarterly profit of $17 million.
While a smaller company might have different problems that lead to bankruptcy, it doesn’t have to be the end of the line. Filing for bankruptcy is a specialized area of the law, and for best results you need someone who knows the ropes. Your business can emerge from bankruptcy, and thrive despite the hardships of starting over if you have good advice and guidance.
Getting advice on filing for bankruptcy from Van Horn Law Group can help you make the transition successfully, and even help you stay in business.
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