How Bankruptcy Helped These Business Owners
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How Bankruptcy Helped These Business Owners


Once a company files for bankruptcy protection, it can re-emerge and recover. Major businesses, like Delta Airlines, and General Motors, have filed and recovery was achievable.

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When businesses file bankruptcy, the result may be beneficial

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  • Based on data from bankruptcy filings are down since 2008.
  • There were 106 filings in 2010 and 211 filings in 2009.
  • Just under 90 public companies filed for bankruptcy in 2011.
  • Big companies filing bankruptcy in 2011 included:
    • MF Global
    • AMR Corp. parent company of American Airlines
    • Dynegy Holdings

What Does Bankruptcy Mean for Businesses?

Filing bankruptcy allows a business that cannot pay creditors to start over by:

  • using assets to pay debts
  • formulating a repayment plan

Bankruptcy cases are filed under the federal bankruptcy code:

Is Bankruptcy the End?

Recently the Eastman Kodak Company shocked the business world by declaring bankruptcy.

  • According to the Investor Place, bankruptcy is not the end of the line for Kodak.
  • Many big businesses have filed, but remained in business after filing.

What Big Businesses Have Survived Bankruptcy?

Most airlines have filed for bankruptcy:

  • Continental Airlines filed in 1983 and 1990.
  • Continental merged with United to form United Continental Holdings in 2010.
  • United filed in 2002 but rebounded in 2006.

Other big names that have filed for bankruptcy:

  • General Motors suffered losses in 2009, then emerged in 2010 after a government bailout.
  • Uno Chicago Grill joined Sbarro by filing in 2011.
    • Sbarro- found in malls and airport food courts- was founded in 1956 and sold to an equity firm in 2007, before filing in 2011.
  • Friendly’s filed in 2011 after closing 60 stores.
  • Rugged outerwear retailer Eddie Bauer filed in 2003, then again in 2009.


  • Delta Airlines filed for bankruptcy in 2005.
  • Returned to operation in 2007.
  • Per a Delta Airlines press release in April 2007, Delta spent 19 months restructuring its business by:
    • Instituting a “comprehensive transformation plan” with “$3 billion in annual financial improvements.”
    • Having four “consecutive quarters of operating profits, with $155 million” in the first quarter of 2007.
    • Having the lowest “mainline non-fuel CASM” of all carriers in 2006.
    • Decreasing its revenue gap with the rest of the industry to 95%.
  • The U.S. Bankruptcy Court of the Southern District of New York allowed Delta Airlines to leave bankruptcy on April 25, 2007.
  • In 2011, Delta reported a net income of $1.2 billion.
  • Delta’s adjusted debt was $12.9 billion, down by $4.1 billion from 2009.

General Motors

  • General Motors (GM) filed for bankruptcy in 2009.
  • Returned in 2010 after government bailout.
  • According to CNN Money, General Motors filed after
    • loses
    • market share declines
    • receiving $19.4 billion from government wasn’t enough to save GM from filing
  • U.S. Bankruptcy Judge Robert Gerber said that GM could access $15 billion in government funds.
  • CNN Money reported that GM would be jointly owned with U.S. taxpayers holding a 60% stake in GM, and unions, the company’s creditors, and Canadian provincial governments holding the remainder of GM.
  • In 2012 GM posted their top annual profit since going bankrupt.
  • GM’s income for 2011 was $7.6 billion, up from $4.6 billion in 2010.

Eddie Bauer

  • Rugged outerwear retailer Eddie Bauer filed in 2003, then again in 2009.
  • Eddie Bauer was “overwhelmed by debt payments and a steep drop in customer spending,” per the Puget Sound Business Journal.
  • Like major retailers - Linens ‘n’ Things and Circuit City - Eddie Bauer was a victim of declining sales.
  • The Street reported that Eddie Bauer “entered a pre-packaged bankruptcy” and was sold to Golden Gate Capital.
  • Golden Gate Capital paid $286 million for Eddie Bauer.
  • According to The Street, Golden Gate Capital has not revealed its next move, but it will likely “exit the investment.”
  • Eddie Bauer announced the launch of its Sports Shop Collection for the American sportsman and sportswoman, in 2012.

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