In the business world, filing for bankruptcy suggests that a change of strategy is required in terms of how financial aspects of the business are run in order to survive. Following a bankruptcy, it is clear that some of the policies adopted were simply not in the best interests of the company. No matter what the cause, a responsible business owner will likely take the blame and try to remedy the situation, even if at significant personal costs. This is by no means a permanent situation, as many Tyler, Texas, residents know, with owners likely to regain their financial status when the business recovers.
In the case of one real estate firm, the economic recession of 2008 took its toll with the company’s chairman-cofounder, as well as its chief executive officer, both having to quit their posts. With the CEO being the cofounder’s son, the damage affected the family as well. Upon filing for Chapter 11 bankruptcy, the family’s fortunes slid from billionaire status to under a quarter of the pre-bankruptcy worth. Their company had meanwhile seen the price of its stock fall to under a dollar.
The business underwent reorganization and slowly made a recovery. Despite not being in charge any longer, the founding family was still owners of the business, and they continued to prosper with the company’s regaining health. While their wealth did not reach the same peak as before, it did recover substantially, bringing them back up to the billionaire bracket.
Given that risk-taking is an inherent element in any business strategy, the loss of financial status is a constant risk for many big businesses. Often, stakes keep building over years and decades to the point where if and when there is a fall, the loss is proportionately greater. Such a rising and falling of fortunes is often the best test of a business owner’s ability, with those able to bounce back seen as being eminently more capable.
Source: Forbes, “Back from Bankruptcy: The Billion-Dollar Families Whose Fortunes Survived,” Chloe Sorvino, July 13, 2014