There comes the point in a company’s lifespan where it must decide whether to file for bankruptcy to save it from being broken up or fading away. The primary reason for filing is debt. By filing Chapter 11, a company can still keep operating while it settles on a payment plan by the bankruptcy court and restructures. When a company restructures, it can reduce its debt considerably and attract new investors. Bankruptcy lawyers often get a bad reputation, but they are there to make sure the company makes its payments and survives. Below are some companies that have filed for bankruptcy to everyone’s dismay.
- Marvel Comics – To hear that Marvel filed bankruptcy in 1996 doesn’t seem real, but it was. The company’s stock dropped 80%, and the comic book bubble burst in 1993. However, ten years and 17 films later, Marvel came back with a vengeance.
- Sbarro – The pizza chain that began out of an Italian grocery store filed for bankruptcy in 2011 to restructure the company. It reduced its debt by $195 million and received a $30 million capital infusion.
- Six Flags Entertainment – You’re probably wondering how a fun place could end up in bankruptcy? It racked up a $2.5 billion debt, that’s how. The company filed in 2009 and reduced its debt by $1 billion. As part of the bankruptcy, the company was turned over to its bondholders.
- Trump Entertainment Resorts – The company filed in 2009 right after Donald Trump resigned as Chairman of the Board. It had a debt of $1.25 billion and paid off a good portion of it. The bankruptcy angered many union workers. The bankruptcy court ruled that the automatic stay was inapplicable to and did not bar a labor union from contacting the company’s casino customers and potential customers and discouraging them not to do business with it.
- Texaco Inc. – To avoid a posting a multibillion-dollar bond to continue a legal fight, Texaco filed for bankruptcy in the 1980s. The company was forced to pay Pennzoil $10.5 billion in damages. Chevron bought the company in 2000. It was the largest bankruptcy in U.S. history at the time.
- Texas Rangers – Sports teams are not immune to financial issues. The team had a $575 million debt, including back salaries for players. The Rangers filed in 2010, and a group of investors rescued the team. They came back strong and won two American League championships since then.
- The Chicago Cubs – The filing for bankruptcy in 2009 was due to the sale of its parent company, the Tribune Company, despite having one of the best attendance records in Major League baseball. The $845 million sales would allow the Chicago Cubs to have a new owner. However, the team was not listed in the bankruptcy. The bankruptcy protected the new owners from Tribune creditors’ claims.
- Pittsburgh Penguins – To round out the list is another sports team, but in hockey. Filing Chapter 11 in 1998 (second time), the Penguins were over $90 million in debt. The bankruptcy protected the team from creditors and kept it in Pittsburgh. Also, the team got emergency loans as part of the bankruptcy. Mario Lemieux bought the team and the team is now a competitive franchise.
American Bankruptcy Board Certified
At Cibik & Cataldo, choosing the wrong bankruptcy lawyer will cost you time and money. We are American Bankruptcy Board certified, which means we know bankruptcy law and stay on top the latest changes. You’ll feel confident you’re being taken care of when we represent you in civil court and that you will survive this financial setback. Contact us today for a free consultation!