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Below are our picks for the top 10 companies that went bankrupt in the last decade. Asking where the biggest organizations on the planet are found and where the greatest bankruptcy of 2020 has occurred will give, obviously, a similar answer. Because of Covid-19, the US economy endured its most economic contraction in over 10 years.
As a result of social distancing, lockdowns, and travel limitations, numerous organizations ended up losing clients or shut down operations. Companies situated in different countries even with a huge part of their activities in the US endured similar consequences.
However, when one analyzes the ten bankruptcies listed, it becomes evident that these organizations were battling well before the pandemic hit. A blend of typical and painful remedies ensued as a last resort of survival for every one of them, such as economizing and firing employees, refinancing or debt restructuring and selling assets.
However, it will not fix the issues brought about by massive debt through changing customer preferences, ineffective management, and a flawed business model. Bankruptcy procedures highlight every one of these issues and demand complex solutions. These are an unpleasant pill to swallow but then— as a rule— are essential to start another, more prosperous stage for these companies.
In this list, we will be looking at the biggest firms and corporations that went bankrupt between 2010 and 2020. The tech and retail industry has been especially vulnerable with large corporations closed down due to a liquidity crisis (Fortune, 2021). Only the companies that officially went bankrupt will be included In this list. It does not matter if the companies recover, as long as they declare it, they will be included.
1. Blockbuster, 2010
Before Netflix, there was Blockbuster. In fact, Netflix wanted to become a Blockbuster, on the net and wanted to sell itself to blockbusters. The arrogance of the CEO in September 2000, cost Blockbuster its future, eventually leading to filing for Chapter 11 at the end of 2010, as of now they only have a handful of blockbuster stores.
At its peak, Blockbuster was operating over 9000 stores and employed 82,000 people. Blockbuster dominated the video rental market throughout the 1990s and early 2000s. However, with the advent of Redbox, video on demand, pirating, and especially Netflix, blockbuster was struggling to compete.
Ironically Blockbuster could Have Bought Netflix for $50 Million, which its current valuation standing close to 257 billion dollars. Experts in the industry blame blockbuster for its own failure, with some pointing out poor management and poor business strategy. But hey at least the closers gave us that funny last blockbuster’s Twitter account.
2. Kodak, 2012
Founded in 1888, Kodak was the name in photography and film around the world. However, the company was struggling with the growing popularity of digital photography, even though the technology was first built by one of its own engineers. They were slow to transition because they undermined the potential of this technology. They eventually filed for bankruptcy in Jan 2012.
The company stopped making various products and sold off patents to other companies and earned an excess of 525 million dollars. But the company rose from the ashes in Sept 2013 and is still in operation as of 2021. At present Kodak gives graphic communications, functional printing, and professional and packaging services for organizations around the globe. Its core business divisions are Consumer and Film, Software and Solutions, Micro 3D Printing and Packaging, Enterprise Inkjet Systems, and Print Systems.
3. Fisker Automotive, 2013
Henrik Fisker, an American automotive designer, founded Fisker Automotive in Southern California in 2007. Fisker has confronted poor sales and massive financial difficulties for almost the entire span since its inception regardless of the likely trait of manufacturing hybrid vehicles.
Even though the company tried to draw recognition from famous entertainers and high-profile actors, Fisker still struggled. The company effectively ceased all its operations back in 2013 when it defaulted to repay loans. In April, Henrik Fisker announced to the layoff of 75 percent of Fisker Automotive’s workforce due to financial woes. The company voluntarily filed for the bankruptcy protection, which came after the agreement of selling it to an investor group, the Hybrid Technology LLC.,
4. PG&E, 2015
On January 14, 2019, Pacific Gas and Electric (PG&E) started processing to file for bankruptcy with prior notice of 15 days after confronting possible obligations of $30 billion. They did this intending to petition for financial protection insurance.
Different wildfires caused by PG&E from 2015 to 2018 were the huge reason behind those obligations. The parent company of PG&E is the PG&E Corporation, which declared bankruptcy on January 29, 2019. PG&E will pay the fire survivors following their claimed amount only if something remains after meeting the priority rights and securities of the company.
Fire survivors were given the same priority as the bondholders since they were the unsecured creditors for PG&E; this almost guarantees that they won’t get the amount required to settle completely. PG&E had a cutoff time of June 30, 2020, to leave insolvency to partake in the California state fierce blaze protection reserve set up by AB 1054 that assists utility companies with paying for future out-of-wildfire claims.
5. Toys R Us, 2017
Toys R Us was founded in 1948 and subsequently opened 1500+ stores spanning 35 countries over the next few decades. They were once one of the biggest toy chain stores in the world. It is true that kids nowadays are more interested in smart devices and the internet.
However, due to a large variety of factors, Toys r us filed for Chapter 11 on Sept 18, 2017. The accumulated debt of the company stood at 5 billion dollars and has not seen a profit in the last 5 years of operation. In march 2018 the company announced they are closing every one of their UK and American stores, totaling roughly around 500 stores.
In 2019, Toys R Us tried once again to start operations in the US by opening two new stores in New Jersey and Texas but those unfortunately also ended up being closed as a result of the coronavirus pandemic.
6. JcPenney, 2020
JCPenny had a big name with over 100 years of history in America. Alongside, with 840 stores across the state, they were one of the prominent department stores in New York City. But their bankruptcy news came after years of struggling business.
The core reason behind this was the pandemic that compelled them to take this decision. In its heydays, it was known as a great budget department store. Over time it ended up losing market share to more desirable brands. JCPenny even tried to rebrand itself as a trendy store by setting up boutiques and coffee bars for the past decade alongside its giant stores.
Which further alienated their core customers, as they were often involved in bargaining. Moreover, they undermined the importance of e-commerce and having an online presence. At the start of 2020, JCPenny could not gain any profit at all over the decade. Referring to all the disruptions provoked by the pandemic led JCPenny to file a case for bankruptcy on May 15.
On Sept 20, management announced that they reached a deal to save the company. Based on cash and debt of overall 800 million dollars, the Simon Property Group and Brookfield Property Partners agreed to acquire JCPenney.
7. Hertz, 2020
The failure story of Hertz is one of the most publicized business stories in recent times. Establishing branches in 150 countries, Hertz had been a recognized brand worldwide since its inception. They are especially popular in airports, where fleets of cars await travelers. In May 2020, they failed to repay the 400 million dollar loan. That’s when they filed for bankruptcy.
While their competitors survived, they still struggled because of a flaw in the business model, which relied on selling off the cars after getting retired from the fleet. Later they injected this cash into the business to pay back their creditors.
But unfortunately, their second-hand car business also got into a standstill position due to this pandemic. Hertz eventually had to face a double whammy due to being unable to pay all the debts. They are even now trying to sell off a massive piece of their mighty 500000-car fleet to put all their finances in order.
8. Frontier Communication, 2020
Frontier Communications Corp. declared bankruptcy to execute a coordinated $10 billion debt-cutting proposition backed by the telephone and broadband service bondholders. Norwalk Conn. became the USA’s No. 7 broadband supplier depending on the subscribers’ vote.
After the parting of the Ma Bell monopoly in 1984, Norwalk, Conn., also became the No. 4 communications firm after AT & T Inc. Frontier developed rapidly in the course of the last two decades by gathering up telephone networks that different organizations were eager to drop.
9. Neiman Marcus, 2020
The 113-year-old luxury department store chain Neiman Marcus Holding said in May 2020, it has completed its Chapter 11 bankruptcy protection process, emerging from one of the highest-profile retail collapses during the Covid-19 pandemic.
The company was struggling to deal with its crippling debt and received the final blow during the pandemic. Geoffroy van Raemdonck will continue to serve as Chief Executive Officer of Neiman Marcus Group, which had filed for bankruptcy protection. The company’s new owners are funding a $750 million exit financing package that fully refinances its debtor-in-possession loan.
10. Payless ShoeSource, 2020
Payless ShoeSource declared bankruptcy for the second time on February 15, 2020, with the expectation of shutting down each of the 2,100 retail stores in the United States and Puerto Rico. The organization likewise shut down its online business webpage. The sell-off started on Sunday, and all stores will be covered before the finish of May.
Around 1,400 diversified and authorized stores internationally will stay open and are not influenced by this activity. This is the second chapter 11 of the organization. In 2017, the first round of stores was shut – 673 units were covered at that point.
However, the organization kept on experiencing a large number of forceful contenders, including Zappos (a division of Amazon), Kohl’s, Walmart, Target, and other people who provided more compelling product offerings. A visit to a Payless store got irrelevant.
Bankruptcies are unfortunate events for the company, employees, suppliers, financial institutions, and all other stakeholders. The impact of big corporations going down leaves behind a ripple effect in the economy. However, the bankruptcy of so many multi-billion dollar businesses only proves the point that no company is ever too big to fail.
In certain circumstances, companies might fail because of poor leadership, and in other cases, external events like the pandemic and other natural disasters like wildfire could lead to bankruptcy. Therefore, it is very important for us to take lessons and be prepared for the worst, and forge an adequate contingency strategy to ensure survival. Let’s be more hopeful about the future where large corporations will carefully handle debt and grow bigger by employing more people and taking the economy forward.