The word bankruptcy brings fear to a CEO. A company who gets hit with the label bankruptcy is associated with hitting rock bottom. However, some companies have managed to be the exception to this commonly held thought. Bankruptcy is never a positive sign for investors, but when used purposefully, declaring bankruptcy can be the saving grace for a company with a great idea looking for a new financial strategy. Read on to learn more about some companies that have undergone bankruptcy and still emerged victorious. .

There are many well-known and successful companies from every industry that had to utilize the bankruptcy strategy. In the food industry, Sbarro’s exclusivity of pizzas in malls and airport courts could not compete with the people’s preference of “fast casual” restaurants and e-commerce. Meanwhile, the rise of digital media forced the film-based photography company Kodak into bankruptcy in 2012. For Nokia, the company failed to adapt to technological advancements in smartphones from competing brands like Apple and Android that snatched the crown.

The economic crisis of 2007-2008 took a heavy toll on companies traditionally expected to be financial strongholds in the United States. For General Motors, the economic downturn led to a decline in car sales by 30%. To get out of the financial hardship, the company had to lean upon the support of the US government to file for bankruptcy in 2009. Chrysler is another automobile company that similarly nosedived during the Great Recession. Chrysler had to halt all vehicle production in 2008 as it faced insolvency.

Debt is a mechanism for businesses to avoid cashflow issues. On the flip side, debt can disrupt income streams and potentially cause companies to go bankrupt if left unpaid. The theme park firm, Six Flags, declared itself bankrupt in 2009 after failing to pay a $2.4 billion debt. Texaco’s unpaid debt led to Pennzoil issuing a lawsuit that called for an $11 billion settlement. Hostess, the company that brought us Twinkies, had to close their ovens back in 2012 when grappling with the fading popularity of junk food.

The tech giant Apple came very close to bankruptcy in 1997 due to a series of poor company decisions following Steve Job’s exit from the company in 1985 and even in his return as CEO. Marvel also suffered from a lack of innovation before becoming the superhero genre giant. Following the collapse of the comic book industry in 1993, Marvel’s lackluster and premium-priced comics resulted in poor sales that forced the company to go bankrupt in 1996.

In a strange twist of fate, Apple was saved by a $150 million investment made by Microsoft so that the latter company could not be labeled as a monopoly. As of 2021, Apple is valued at $2 trillion. Another instance is when American Airlines was saved from debt by merging with US Airways in an $11 billion deal. American Airlines Group Inc, the merged company, is now valued at $66.5 billion in 2021. Meanwhile, Chrysler merged with Fiat to form the Fiat Chrysler Automobiles, which has a market capitalization of $30.91 billion in 2022.

Sometimes, the smartest way to turn around a company is to admit defeat and sell the company to new management. Sbarro, Hostess, and General Motors did just that. Hostess, in particular, significantly improved its Twinkies formulation under the new management, which customers greatly welcomed when Twinkies returned to the shelves in 2013.