5 big brands that survived Chapter 11

Hang in there, Kodak. Bankruptcy doesn't have to mean the end.

By InvestorPlace Jan 25, 2012 10:29AM

Cory Docken/Spots Illustration/JupiterimagesBy Jeff Reeves

Eastman Kodak (EKDKQ) surprised few investors by declaring bankruptcy last week. It was clear to many business insiders back in September that Kodak was headed to zero after a panicked move to tap its credit line. As those who have watched the corporate history of Kodak know, years of big debts and a lack of innovation have been weighing on the iconic photography company for quite some time.

So is bankruptcy the end of Kodak? Will the brand disappear forever?

Probably not. Chapter 11 is sometimes just another chapter in the long history of a company. Here are several big-name brands that have declared bankruptcy and emerged successfully on the other side.

Major airline carriers

It's impossible to pick just one airline brand that has declared Chapter 11. Major carriers have gotten bankruptcy filings down to a science in this era of expensive regulations, expensive fuel costs and expensive union contracts. Here's a short list of the players:

In November of last year, AMR Corp. (AMR), the parent of American Airlines, was the last of the "legacy carriers" to suffer bankruptcy reorganization. It has yet to emerge, obviously.

Continental Airlines slid into bankruptcy first, in both 1983 and 1990, before it merged with United to form United Continental Holdings (UAL) in 2010. United itself went bankrupt in 2002 and emerged in 2006.

Delta Air Lines (DAL) filed for bankruptcy in 2005 and emerged in 2007.

US Airways (LCC) went bankrupt in 2002, briefly emerged, and went bust again in 2004. It was married with America West in 2005 to make it healthy enough to muddle through.

Obviously, the airline business has seen a mess of bankruptcies. But the planes keep flying, and the companies keep operating. They may never be growth stocks or big cash cows for investors, but they haven't disappeared.

General Motors

GM (GM) was facing troubles before the financial crisis, and in early 2009 relied on a government bailout -- as did fellow ailing automaker Chrysler. The total price tag of the automaker bailouts was $82 billion (and according to a recent report, taxpayers will lose about $14 billion on the "investment").

But GM made a speedy exit from Chapter 11, emerging in July of 2010 and holding a $20 billion GM public offering in November 2010 -- the largest IPO in history at the time.

Bankruptcy led to lots of changes at GM, from restructured union contracts to the end of the Pontiac and Saturn brands to the death of Mr. Goodwrench. But now, GM is soundly profitable with around $150 billion in annual revenue. So much for General Motors being junked after bankruptcy.


A mainstay of mall and airport food courts, Sbarro has about 1,000 cafeteria-style pizza and pasta restaurants in the U.S. and overseas. The late Gennaro Sbarro started the business in 1956, and his family sold it to a private equity firm in 2007. The company went under in 2011, however, filing for Chapter 11.

Sbarro's challenges were apparently shared in the pizza "sector" in 2011. The nation's No. 10 pizza shop, west-coast based Round Table pizza with over 500 locations, and Uno Chicago Grill also went belly up in the same year.

In November 2011, Sbarro was granted court approval to emerge from bankruptcy after slashing its debt by around 70%, and providing the company with $35 million in cash to grow.


In October of 2011, Friendly's announced that it was declaring bankruptcy and closing over 60 stores nationwide. But quick as a wink, the company emerged just a few weeks ago -- on Jan. 9 -- after selling operations and restructuring. Friendly's blamed the sluggish economy and slowing consumer spending, but apparently a quick reshaping of the balance sheet and some cost-cutting was enough to change the company's fortunes.

Friendly's has a 76-year history of offering tasty desserts and diner food. But it also has gotten a bad rap with many consumers for the quality of its service. Check any online review site like Yelp and look for yourself. New management says it will address these concerns, but only time will tell.

It's also worth noting, however, that Friendly's is reliant on the success of its ice cream business far above any gains at its namesake restaurants. At the time of the bankruptcy, old ownership Friendly's Restaurants Franchise LLC listed estimated assets and liabilities in the range of $10 million-$50 million, whereas another unit Friendly Ice Cream Corp listed liabilities and assets of $100 million-$500 million.

It's no surprise then that Friendly's has made retail sales of its branded products a priority now that it's out from under Chapter 11.

Eddie Bauer

In the 1990s, you'd be hard-pressed to find a more American brand than Eddie Bauer. It provided stylish and rugged outdoor wear in the vein of LL Bean and even got the Bauer brand on the most iconic SUV of the era -- the Ford Explorer. But just several years later, Eddie Bauer was out of style and consumers were trading in four-wheel-drive gas guzzlers for hybrids. Its parent company, Spiegel Catalog, sought bankruptcy protection in 2003.

After emerging in 2005, however, Eddie Bauer filed for Chapter 11 again in 2009. It was acquired at auction by Golden Gate Capital later that year.

Though not quite the pinnacle of style and outdoorsy toughness it once was, Eddie Bauer remains a respected apparel brand and a regular tenant at shopping centers and outlet malls. It employs some 10,000 people worldwide -- and in case you're curious, it's running one heck of a 60%-off sale right now.

So don't feel bad about these companies. They've made progress while others, in similar situations, could not.

They hardly compare with the mega-failures that made the list of the seven largest bankruptcies in U.S. history.

Jeff Reeves is the editor of InvestorPlace.com. Write him at editor@investorplace​​.com, follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook. Jeff Reeves holds a position in Alcoa, but no other publicly traded stocks.


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Jan 25, 2012 12:11PM
Not just stockholders, but their debtors got the shaft, too.  They should put CEOs and the board on the hook for the debts they incur.  Make it personal, and far fewer CEOs will wantonly flaunt risky decisions that bury their companies.  But as long as they get their $20M annual performance bonuses with "no takebacks" they will be more than willing to risk it all.
Jan 25, 2012 12:01PM
They might have survived but their stockholders didn't.  Only fools would play these stocks!
Jan 25, 2012 12:37PM

Why shouldn't G M survive? The taxpayer may not though. Never buy another vehicle at inflated prices that I've already paid for with taxes. Go Kia, Toyota etc.



Jan 25, 2012 1:41PM
Buy Ford. That's buying mostly "made in USA", and Ford didn't accept any bailout.
Jan 25, 2012 9:08PM
GM was not a bankruptcy............................it was Obamaruptcy.  Under a normal bankruptcy bondholders/creditors have the first lien/rights of a company declared bankrupt.  Obama, and his cronies made up their own rules of bankruptcy...........fleecing bondholders, creditors, while infusing approx.52B in taxpayer money and rewarding the blood sucking UAW 17% ownership. The bottom line.................even though Obama advantaged GM with a better 'net cash" position than Ford to fund R&D, offer the highest rebate/marketing incentives per unit sold in 2011 it was not enough to earn the #1 selling namplate in the U.S. ........It was Ford, the only name plate with over 2M sales in 2011.  GO FORD!!!!!!!!!!!!............and they did it on their dime!.        
Jan 25, 2012 1:14PM

trdwhtman what GM vehicle has an inflated price?  Take a look at a Civic Corolla and Cruze and tell me which one is the most expensive.  Then look at the Malibu Camry and Accord and do the same. 


Buicks are less expensive than the Lexus line and Cadillacs are less expensive than BMW and Mercedes. 


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