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26 Businesses We Can't Believe Went Bankrupt

Toys “R” Us

Toys “R” Us was one of the most recent bankruptcies that shook the United States. In 2017, the company filed for Chapter 11 bankruptcy, stating it hadn’t made an annual profit since 2013. By 2018, all of its locations shut down. That being said, some investors are taking a hard look at the toy store to see if it can make a comeback.

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Enron

Enron had a spectacular rise and fall. It had approximately 29,000 employees and claimed $101 in revenue before an accounting fraud came to light in 2000. By 2001, Enron filed for bankruptcy. Corporate officers used financial deception to hide the fact the company had actually been losing money. By 2006, the company had no assets, and it settled with all institutions by 2008.

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General Motors

General Motors was one of the auto manufacturers that filed for bankruptcy during the Great Recession. Through the Troubled Asset Relief Program, the United States Treasury invested $49.5 billion into the company and recovered $39 billion when it sold its shares in 2013. The bailout saved 1.2 million jobs. By 2010, GM began reorganization and would return to profitability later that year.

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Delta Airlines

Delta Airlines is one of the biggest names in flight, but it wasn’t always the case. In 2004, Delta cut jobs and created a “super-hub” in Atlanta to avoid bankruptcy. It didn’t work. In 2005, the company filed Chapter 11 with the company’s liabilities being around $28 billion. To recover, Delta reorganized and reduced its costs via salary cuts and layoffs. It also purchased rights to popular new routes.

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Blockbuster

Blockbuster is hard to forget. It was the video store everyone spent their weekends visiting. The company seemed to have a firm handle on its finances until 2010. Late 2010, Blockbuster filed Chapter 11 bankruptcy due to being $900 million in debt. In 2011, the company announced that the creditors couldn’t come up with a Chapter 11 exit plan, and the company would be sold.

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Texaco

How could an oil company go bankrupt? In the 1980s, the company was in a brutal legal battle with Pennzoil, which cost Texaco $10.5 billion. It filed for bankruptcy and immediately started getting its finances back in order. It was purchased by Chevron in 2000, a move that created one of the largest companies in the world. 

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Ally Financial

Ally Financial was one of the companies to get a loan during the Great Recession. However, in 2012, Ally filed for Chapter 11 bankruptcy while still owing about $12 billion to the government. To recover, Ally Financial decided to leave risky mortgage ventures and favor safer investments. This move saved Ally, which ultimately turned a $2.4 billion profit.

Lehman Brothers

Lehman Brothers was the fourth biggest investment bank in the country, but it was also using questionable accounting tricks to make it seem more financially stable than it was. It all came to an end with the mortgage crisis in 2008. The company filed for bankruptcy with $613 billion in bank debt and $155 billion in bond debt. Lehman Brothers is the largest bankruptcy in American history.

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Marvel Entertainment

Marvel is one of the biggest brands at the moment, but it almost didn’t make it. In the late 1990s, Marvel had declining revenue and devastating stock losses. The company filed for bankruptcy, but that wasn’t the end. Marvel turned to movies to recoup the money. Moves like Blade, X-Men, and Spider-Man made it the cinematic giant we know today.

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Chrysler

Chrysler was on the verge of bankruptcy in 1979 when the government stepped in and gave it a $1.2 billion loan, but more than 60,000 employees still lost their jobs by 1983. By 2008, the company required another bailout, a move many automakers made. To turn around, Chrysler revamped its models and collaborated with Fiat to return to profitability.

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Washington Mutual

Washington Mutual is the second largest company that has ever declared bankruptcy. This lending company was responsible for doling out shockingly high mortgages to people who couldn’t afford to repay them. This also makes it one of the largest bank failures in history. 

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Sbarro

Sbarro filed for Chapter 11 bankruptcy protection in 2011 even though it was the fifth-largest pizza chain in America. In a plan to restructure, the company ceded ownership to lenders and closed 25 locations. Sbarro decided to rebrand by updating its pizza recipe by bringing in fresh ingredients. By 2014, the company exited bankruptcy. 

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Converse

Converse has been around since the early 1900s, but it wasn’t invincible. The company reported $5.4 million in losses in 2001, which led to the company filing for Chapter 11 bankruptcy. Thankfully, that wasn’t the end of the story. Nike purchased the company for $305 million and rebranded it as a place for artists and designers to create new varieties of shoes.

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WorldCom

WorldCom was a classic example of criminal decisions causing the failure of a company. It filed Chapter 11 bankruptcy after a major accounting fraud came to light. This fraud accounted for a $3.8 billion loss. Bernie Ebbers, the co-founder, was sent to prison for 25 years following an investigation. The company was rebranded but was ultimately purchased by Verizon in 2005.

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Six Flags

Six Flags Entertainment may have looked fine on the outside, but in 2009, the company was $2.4 billion in debt. It filed for Chapter 11 as a way to repair its financial situation. The problem was that the debt was caused by the Great Recession rather than a failing business model. Less than a year later, the company had cut its debt in half and was reemerging with plenty of visitors per day. 

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AIG

American International Group had risky, unregulated hedge fund-like practices that used cash from insurance to fund its ventures. Despite this, the U.S. government bailed them out for $85 billion in 2009. AIG became a poster child for the “too big to fail” mentality. It took $182 million to pull AIG out of the brink. From there, AIG focused on getting rid of bad investments.

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Radio Shack

Radio Shack was a popular place to buy any electronics you may need. Well, it went bankrupt twice in its history; once in 2015 and the other in 2017. After downward-sloping sales, Radio Shack attempted to sell its products online but found it difficult to compete with companies like Amazon. 

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Betsey Johnson

Betsey Johnson is an instantly recognizable brand, but it was forced to declare bankruptcy in 2012. This caused every brick-and-mortar store to close, which laid off 350 employees. Betsy Johnson then stepped in turned her company around by going on a design spree. She collaborated with Urban Outfitters and created new lines in bridalwear, kids’ clothing, eyewear, and more.

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American Airlines

In 2011, the airline industry took a massive downturn as oil prices skyrocketed. American Airlines was one of the companies that were forced to declare bankruptcy. In 2013, AA merged with U.S. Airways but kept the name as it was easily recognizable worldwide. The combination saved AA and created the largest global airline.

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Tower Records

It’s easy to see how a music company could go bankrupt with the recent move to streaming services in media. Tower Records had stores in the United States, Europe, and Tokyo. The company took on $110 million in debt when it experienced tough competition with Walmart and Target. Tower Records then filed for bankruptcy in 2004 and 2006 because it couldn’t compete with Walmart, Target, and the digital marketplace. 

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Ashley Stewart

Ashley Stewart had years of losses and a high turnover rate for employees. It was to the point where it was headed for its second bankruptcy in two years by 2013. The CEO stepped in and relied on “math changing the company culture, a mission-driven dedication to our core customer, transparent communication, lean process and – yes – kindness.” It worked. The company downsized 40%, but sales were up 25% a year later.

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The Texas Rangers

The Texas Rangers had a strong 2009 record, but the brand was hurting financially. Players that had left were still owed salaries, resulting in $575 million in debt. The Texas Rangers filed for Chapter 11 bankruptcy in 2010. The team recovered after being purchased by a group of investors. It was much easier to stay afloat since the team has been American League champions twice after bankruptcy.

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Kodak

Kodak was once the brand you purchased if you wanted to get a camera of quality. By the 1990s, the company began having financial issues. This all led to Kodak filing for Chapter 11 bankruptcy in 2012. Instead of selling cameras, the company announced its intention to sell film, commercial scanners, and kiosk operations. Kodak emerged from bankruptcy in 2013.

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Hostess

Hostess notoriously filed for bankruptcy in 2012. Once everyone heard, they ran out to buy all the snacks they could grab. However, a takeover deal saved the snack-cake maker. Gores Holdings gave Hostess the unique ability to come back and even grow. That being said, 60 products were cut, but it allowed Hostess to create new twists on old favorites and repay debt.

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Disney

Disney’s bankruptcy isn't by recent by any means. In fact, the global giant filed for bankruptcy before anyone knew its name in 1923. Disney's financial troubles stemmed from no one knowing the brand. It wasn’t until Steamboat Willie that Disney got a reprieve and began cultivating the company we all know and love today.

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Forever 21

Forever 21 announced in September 2019 that would have to file for bankruptcy. Along with this, it’s closing 350 stores worldwide, and ceasing operations in 40 countries, including Canada. The brand helped create the “fast fashion” trend, but it wasn’t enough.

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