When we think of businesses, we sometimes overlook the fact that a company’s brand value and the company’s equity are not necessarily the same. While a company’s equity can be negative – it owns its creditors more money than the current assets it has, it doesn’t necessarily mean that a company is worthless or that it should just shut down.
And even if the company does indeed choose to file bankruptcy, it doesn’t mean that the business will be gone for good.
With the proper legal restructuring and investments, companies that file for bankruptcy can still make a comeback, and many do – though their shareholding structure will look significantly different.
It’s Naiise To Make Comebacks
One recent example will be Naiise, an online retailer that used to have physical retail outlets. In April 2021, Naiise went into liquidation, with its founder also filing for personal bankruptcy as he had signed personal guarantees for the company’s loan. During that period, there were also reports that Naiise owed its vendors money for selling their stocks on a consignment basis.
While anyone who is owed money would be frustrated, the general expectation that many people in Singapore had at the time was that the company would be gone for good. After all, it was filing for bankruptcy and had shut down its operations completely, both online and offline. However, earlier this week, Naiise announced that it would be making a comeback with its new owners.
Bankruptcy Is Not Necessarily The End
While some of us may think that a company filing for bankruptcy would mean the end of it, the truth is that bankruptcy is not necessarily an end by itself.
Instead of thinking of bankruptcy as a company’s death, the more accurate way to think about it is that the company is undergoing “chemotherapy”. During this period, the company will explore ways to restructure its organisation and its debt, in the hopes that it can survive. And that appears to be exactly what Naiise hopes to achieve.
Companies That Went Into Bankruptcy Have Made Comebacks Before
While some of us will understandably remain skeptical of Naiise’s ability to make a comeback, it’s worth noting that some major brands have filed for bankruptcy, make a comeback, and have thrived since.
One such company is Marvel – yes, the movie brand we all know. In 1996, Marvel actually filed for bankruptcy. The details of what happened are complex and you can read more about it here. The company only managed to restructure itself in 1998 and has since gone on to become one of Hollywood’s most popular brands. It was sold to Disney in 2009 for $4 billion.
And if that isn’t impressive enough, while they never actually filing for bankruptcy, Apple – the most valuable company today by market capitalisation, almost went bankrupt in 1997 until they got a $150 million investment. The investor that saved them – Microsoft.
Now the situation and structure facing Naiise, and its new owners are different from what some of these other companies face, and I am in no way suggesting that Naiise is going to do well. However, the point is that for companies that do retain some brand equity value, bankruptcy isn’t always the end of their journey.
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