Businesses That Bounced Back After Insolvency

July 4, 2017

Struggling and often fire fighting with your business when it is not living up to its projected forecast nor your personal expectations is both wearing and stressful. But you must accept it and you must act.

Maybe you unknowingly messed up, maybe the economy tanked or maybe you’ve just been extremely unlucky. Regardless of what went wrong, facing insolvency doesn’t have to mean the end of your business!

If you seek professional advice as early as possible, there’s often a good chance that you can right a sinking ship and return your business to profitability.

Unfortunately, many businesses wait too long to seek help and advice from a suitable professional until it’s already too late. Often business owners are in denial,\ or wrongly fear that approaching an insolvency practitioner for help and advice will be expensive or akin to admitting defeat and they will lose everything and therefore put off asking for help.

We offer free and impartial advice to business owners so there’s nothing to lose other than say 30 minutes of your time in chatting with us.

This week, we’re looking at some Scottish and international business names that have overcome some serious financial turmoil. We’ll look at how they got into financial difficulties, their rescue plan and where they are today.

American Airlines

American Airlines bounced back after bankruptcy

American Airlines is far from the only airline who has recovered from a financial crisis. Delta Air Lines, United Continental and Air Canada have all weathered serious financial crises only to emerge afloat.

In 2005 96 percent of the airline industry in North America was served by 11 airlines. But as things started to change and airlines started merging, American Airlines suddenly found itself falling behind the newly formed aviation heavyweights.

Following four consecutive years of losses, American Airlines filed for bankruptcy in November 2011.

By negotiating a merger with the US Airways, the pair were able to build competitive networks, combine restructuring costs and shore up previous weaknesses.

Although the process was immensely turbulent, American Airlines successfully cut costs and improved its income, which returned it to profitability in 2014.

General Motors

General Motors bounced back after bankruptcy

Founded by William C. Durant in 1908, this small automobile manufacturer grew into a corporate giant in only a few decades.

The 2008 economic recession caused financial havoc for a lot of high profile corporations, including General Motors.

With a debt of more that $30 billion, GM filed for bankruptcy in June 2009.

With the help from corporate bankruptcy experts, a large equity investment from the US government and a radical restructuring, General Motors returned to profitability in late-2010.

Marvel

Marvel bounced back after bankruptcy

Having grown in popularity throughout the 1960s, ‘70s and ‘80s, Marvel had peaked by the ‘90s and was beginning to decline..

Writer Neil Gaiman claimed that the comic book market was yet another bubble and that it would inevitably bust.

He was right.

The comic book industry had become a collectors market driven by speculators. During its peak, enthusiasts were commonly buying buy 20 copies of each issue, intending to read one and keep the 19 others as investments.

As Gaiman predicted, the bubble bust and by 1995 Marvel was heavily in debt.

Hoping to save their famous characters, Marvel’s director, Avi Arad, set up Marvel Studios in a bid to reach new demographics and save the company. The shareholders, however, did not share his vision of televised comics and resisted.

In response, Arad filed for bankruptcy, giving him the power to reorganise the company without the consent of its stakeholders.

The bankruptcy paid off all existing debts and in 2005 Marvel put all the characters up as collateral and secured a financial deal with Merrill Lynch for $525 million.

In 2009, Marvel was acquired by The Walt Disney Company for the generous sum of $4.24 billion.

Blacks

Marvel bounced back after bankruptcy

The high street is no easy place to run a business — especially not in the 21st century! In 2008, Blacks became the latest victim, suffering a loss of £6.8 million.

The loss triggered shockwaves through the company, resulting in serious questions over the future of the retail group. This, in turn, led to a restructuring program where 89 stores were shut down.

In 2010, after years of battling the economic turmoil, rapid changes in consumer behaviours and a series of unfortunate events, Blacks received an offer from Sports Direct to take over the company for a sum of £26 million.

Blacks fought it off and continued to struggle.

In early 2012, Blacks appointed KPMG as administrators and was sold to JD Sports for £20 million after just four hours in administration.

JD Sports said they hoped to rejuvenate the stores as well as cut costs and they did just that.

In 2017, Blacks returned to profit for the first time in ten years, helping JD Sports’ shares to record levels.

Is your business beginning to struggle or already facing insolvency?

I hope these examples illustrate that insolvency doesn’t have to spell the end for a business.

If you seek the correct advice and support, profitable parts of a business, and the attached jobs, can be saved.

If your business is beginning to struggle, the time to seek help is right now and not in several months when things have gotten even worse. The earlier you take advice the more rescue options remain available so increasing the chances that all or parts of your business can be rescued.

Give our team a call on 0141 353 6203 and we will set up a free, confidential and no obligation meeting to explore your financial circumstances and discuss what options are available to you. Once armed with that information you can then decide what you wish to do.

Professional Indemnity Insurance – our professional indemnity insurer is Mapledown Royal & Sun Alliance plc , Mapledown Underwriting LLP, The St Botolph Building 138 Houndsditch London EC3A 7AG and policy number is RTT262119/11273. The territorial coverage is worldwide (excluding professional business carried out from an office in the United States of America or Canada) and excludes any action for a claim brought in any court in the United States of America or Canada.


GLASGOW LIVING WAGE EMPLOYERBarry John Stewart and George Dylan Lafferty are authorised to act as insolvency practioners in the UK by the Institute of Chartered Accountants of Scotland. Company Registration Number SC 477598 | VAT Registration Number 192 5146 03 | Data Protection Registration A1056203 | FCA Registration Number 766693 | Registered office: 2nd Floor Suite 148, Central Chambers, 11 Bothwell Street, Glasgow G2 6LY.