Companies That Have Filed for Bankruptcy
Too often, many companies use debt when constructing their capital structure. Perhaps, this is because it has certain merits compared to equity financing. When the debts accumulate, and the business can’t afford to pay back, they choose to file for bankruptcy as an alternative. While some use this as a way to freeze operations completely, most take the opportunity to not only eliminate debt but to restructure and re-enter the fray.
From the Toys R Us bankruptcy to the Gander Mountain bankruptcy, check out companies that were declared bankrupt at some point.
Toys R Us Bankruptcy
Since its inception, Toys R Us has faced stiff competition from leading brands like Target, Walmart and Amazon. Real troubles stemmed from a $6.6 billion leveraged buyout (LBO) by private equity back in 2005. By September 2017, the company was in deep debt. In a bid to restructure this, they filed Chapter 11 protection and had closed almost all 800 of its stores before the summer of 2018. Although the toy store had plans to liquidate all its intellectual property, its lenders took over and canceled the bankruptcy auction. The turnaround after the Toys R US bankruptcy is seemingly incredible as they (lenders) continue to develop the business’ private brands and expand its international presence.
Pan Am, also Pan American World Airways was a renowned international airline that enjoyed over five decades of popularity. Before its exit, the company had become a victim of the deteriorating economy and spiraling fuel prices. As a result, Pan Am encountered more than ten years of financial losses that kept mounting. The terrorist bombing of its Flight 103 over Scotland in Dec 1988 dealt them the final blow, forcing them to file for Chapter 11 and cease all operations in 1991.
General Motors (GM)
GM, a giant automaker, filed for Chapter 11 in 2009. At the time, the company had more than 2,600 outlets, over 130,000 employees and a value of $91 billion. One may wonder what could have possibly brought such an auto behemoth down? The truth is, they were adversely affected by many years of steadily declining sales. When the global-scale recession came along in 2008, it did them in altogether, giving the company only one option – bankruptcy. However, a bailout by the U.S. and Canadian governments saved the automaker from total annihilation. Despite being one of the most massive reorganizations in the history of U.S. business, it’s also one of the shortest, lasting for only 40 days. A decade later, GM has emerged as model cooperation that enjoys an impressive performance.
Thornburg Mortgage was a popular real estate investment trust that managed mortgages in the U.S. Like almost every other company in the industry, Thornburg was walloped by the 2008 housing crash and credit crunch. A year later, in May 2009, the company filed for chapter 11 at a time when it was valued over $36.5 billion.
Gander Mountain Bankruptcy
Gander Mountain Inc. started in 1960 as a catalog-based retailer in Wilmot, Wisconsin. As of 2017, it was the largest outdoors specialty retail network with 162 stores in 27 states across the country. Unfortunately, things were not all rosy for them at the time. The company filed for voluntary Chapter 11 protection the same year and closed 32 underperforming stores. Two years later, the company has rebranded to Gander Outdoors and is opening stores nationwide. The new management, Camping World, believes that restructuring will help generate solid sales and profits.
Bartifay Law Offices Can Help You
Planning to file for bankruptcy in Pennsylvania? Get an evaluation of your situation from a competent lawyer at Bartifay Law Offices. We will walk with you every step of the way to help you make the process easy and successful. Call us today!