Name a company that has filed for bankruptcy under Ch. 11 in the last 10 years and explain why they became bankrupt.Name a company that has filed for bankruptcy under Ch. 11 in the last 10 years...
Name a company that has filed for bankruptcy under Ch. 11 in the last 10 years and explain why they became bankrupt.
The most publicized Chapter 11 bankruptcy that I can think of in recent years is the reorganization that General Motors (GM) underwent in 2009 and 2010. GM declared bankruptcy at a point when they had about $82 billion in assets and $172 billion in debts.
The cause of this bankruptcy depends on your perspective. Conservatives tend to argue that GM went bankrupt largely because of the "legacy costs" that it had due to the contracts it had signed with labor unions in past decades when it was a dominant force in the auto industry. These contracts gave workers very lucrative retirement benefits which continued to constitute large portions of GM's costs per auto produced.
Liberals, by contrast, point to the fact that GM persisted in making big cars. They think that GM went bankrupt because it failed to produce the sorts of smaller, more fuel-efficient cars that have become more popular as gas prices have risen.