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.

Name a company that has filed for bankruptcy under Ch. 11 in the last 10 years and explain why they became bankrupt.

Asked on by linnie4352

3 Answers | Add Yours

brettd's profile pic

brettd | High School Teacher | (Level 2) Educator Emeritus

Posted on

Borders was the first one to come to my mind, especially given their announcement only yesterday that they are now moving towards liquidation. While I hate to see it happen, bookstores are under the same economic pressure as movie rental houses like Hollywood Video and Blockbuster, in that electronic media has become both widespread and cheaply available, so that it becomes more and more difficult to remain profitable. Audiobooks and especially eReaders have hurt businesses like Borders, along with the recession, of course. Publishing houses are struggling to change and adapt to the same circumstances in order to survive.
litteacher8's profile pic

litteacher8 | High School Teacher | (Level 3) Distinguished Educator

Posted on

The first thing that came to mind for me was Borders Bookstore. Its main storefront competitor is Barnes and Noble, but it also competes with Amazon, a store that offers convenience, low prices and extensive selection. Bookstores are not a recession-proof business, because people do not tend to spend discretionary income on books when they have very little of it. I am an English teacher, and I live and breathe books, but when money is tight I cut back on buying books because they are very expensive and I always have a pile of them that I am waiting to read. But the main reason they were bankrupt was overextension. They simply opened too many new stores, with too high real estate and lease costs.
pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

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.

We’ve answered 318,994 questions. We can answer yours, too.

Ask a question