From Apple To Tesla-10 Big Companies That Bounced Back From The Brink Of Bankruptcy

Starting a business is never a cakewalk, nor is the task of running it successfully year after year as an entrepreneur. The ride in itself is a rollercoaster, whether you are a small company or a big one. And history has witnessed many big companies going bankrupt, while some succumbed, others fought back from the brink of bankruptcy.

Call it good fortune or the persistence of the companies to not surrender to the difficulties and just fail, some of the world's biggest companies, including tech giant Apple and e-commerce giant Amazon, have bounced back from situations where they were staring at bankruptcy.

Eager to know? Read on as we unfold the list of some of the world's biggest companies that bounced back from the brink of going bankrupt.

1. Apple

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It's hard to believe that the world's first company to hit the $3 trillion market value was once on the brink of bankruptcy. Apple was on the verge of going bust in 1997 on the back of financial uncertainty, failed products, and intense competition from rivals.

However, at the last minute when Apple was staring at either bankruptcy or a forced merger with some other tech firm for survival, Apple's rival Microsoft swooped in with a $150 million investment and saved the company. Bill Gates led Microsoft invested $150 million in Apple in exchange for shares in the company.

Do you know that it was a lost iPhone that led Warren Buffett to invest in Apple? Click here to read that story!

2. General Motors

Following the financial crisis of 2008, General Motors (GM), which was once the largest automobile manufacturer in the world, filed for bankruptcy. On June 1, 2009, General Motors filed for bankruptcy in New York, with $82 billion in assets and $173 billion in liabilities. It was the largest industrial bankruptcy in history.

But it managed to bounce back as it was ultimately bailed out by the federal government. In December 2013, the U.S. Department of the Treasury fully exited its investment in GM, recovering a total of $39.7 billion from its original investment of about $51 billion.

3. Twitter

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Perhaps the most recent instance of a company bouncing back from the brink of bankruptcy, at least for now, is Elon Musk's Twitter. Not only did Musk refuse to rule out bankruptcy just a few weeks after acquiring Twitter for $44 billion late last year, he even tweeted in February this year that he saved Twitter from bankruptcy. His tweet came amidst mass layoffs and an exodus of advertisers at the social media platform.

And as recently as this week, Musk merged Twitter's parent firm Twitter Inc with his ambitious everything app X Corp. He also mentioned that Twitter is close to breaking even.

Also Read: From Mass Layoffs, Near Bankruptcy To Merger: What Went Wrong At Twitter Under Musk

4.Kodak

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After enjoying success for several decades, the American photographic film industry's giant Eastman Kodak Co. became a victim of changing times and technologies. Given that Kodak¡¯s core business was selling film, it is not hard to see why the last few decades proved challenging. Cameras went digital and then disappeared into cellphones. People went from printing pictures to sharing them online.

The volume of pictures being printed slowly plummeted. Amidst all this, Kodak struggled to keep up with the transition to digital in the 1990s and 2000s, and ultimately filed for Chapter 11 bankruptcy in January 2012.

After nearly two years of a corporate reorganization, a new Kodak emerged in September 2013, rebranding itself as a technology company focused on imaging. Last month, the company declared Q4 (December quarter of 2022) financial results, with consolidated revenues of $305 million and a year-end cash balance of $217 million.

5.Harley Davidson

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About 14 years ago, American motorcycle manufacturer Harley Davidson was reeling under pressure to survive the economic slowdown during 2009. And at that time, it was Warren Buffett¡¯s company Berkshire Hathaway which helped rescue Harley Davidson.

Harley-Davidson had announced in February 2009 that Warren Buffett¡¯s Berkshire Hathaway and Harley¡¯s then biggest shareholder Davis Selected Advisers, L.P., have each committed to pumping in money by buying $300 million in senior unsecured notes, which became due in 2014. The deal was part of Harley¡¯s three-pronged strategy to counter weak economic times: boost consumer demand by investing in the Harley brand, cut costs, and get additional funding for its finance arm.

6. Marvel Entertainment

Another big name on the list is the maker of blockbuster movies such as Spiderman, The Avengers, and Guardians of the Galaxy-Marvel Entertainment. Marvel filed for bankruptcy in 1996. This was before the company got into the movie-making business and used to focus primarily on comic books.

But Marvel's most superhuman feat turned to be of saving itself. A company that had grown in stature throughout the ¡¯60s, ¡¯70s, and ¡¯80s, its financial success seemed to have reached a peak by the early '90s. From 1993-1996, Marvel's stock plummeted heavily on the back of a series of bursting financial bubbles and questionable business deals. Revenues from comics and trading cards began to collapse too.

In early 1989, millionaire businessman Ron Perelman had come into the picture and spent $82.5 million on purchasing the Marvel Entertainment Group. And amidst the 90s chaos and heavy debt that Marvel Entertainment was in, Perelman set up Marvel Studios, a venture which he hoped would finally get the company¡¯s most famous characters on the big screen after years of legal disputes. To do this, he planned to buy the remaining shares in ToyBiz and merge it with Marvel, creating a single, stronger entity.

Marvel¡¯s shareholders resisted, arguing that the financial damage to Marvel¡¯s share prices would be too great. Perelman¡¯s response was to file for bankruptcy, thus giving him the power to reorganize Marvel without the stockholder¡¯s consent in 1996.

What followed was a bewildering power struggle which raged for almost two years. The battle, when it finally ended in December 1998, had a surprising outcome-ToyBiz and Marvel Entertainment Group finally merged, but Perelman was ousted in the process.

Fast forward to today, the company has a global fanbase and is now a subsidiary of Disney.

Also Read: Disney CEO May Sell The Company To Apple, Claims Firm's Insider

7.Tesla

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Not many are aware that Tesla too was on the verge of bankruptcy. Earlier this year, Elon Musk spoke at the World Government Summit 2023 virtually, where he addressed topics including Tesla. That is where he revealed that Tesla was ¡°really on the verge of bankruptcy for quite a while.¡±

The Twitter CEO touched upon ¡®difficult times¡¯ for Tesla where it was on the edge of survival ¡®if I didn¡¯t give it everything I got, the company could have easily gone bankrupt,¡± Elon Musk said.

He explained that it is lesser work to operate Tesla now than it was between 2017-2019 and that the focus has been shifted from Tesla to Twitter for which he is looking to hire a new CEO later this year.

As far as Tesla is concerned, it reported a revenue of $24.32 billion in Q4 of 2022 (December quarter).

8.Amazon

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Another surprise in this list is Amazon. During the dot-com boom of the 1990s, the company posted larger and larger losses.

So how did Amazon survive the bust? Amazon got lucky by raising lots of money right before the market crashed, giving the company the cushion it needed to ride out the turmoil of the early 2000s, as per Vox's report.

Amazon founder Jeff Bezos' biographer Brad Stone explained in his 2013 book how close Amazon came to going bankrupt in the wake of the 2000 market crash- "Early in 2000, Warren Jenson, the fiscally conservative new chief financial officer from Delta and, before that, the NBC division of General Electric, decided that the company needed a stronger cash position as a hedge against the possibility that nervous suppliers might ask to be paid more quickly for the products amazon sold. Ruth Porat, co-head of Morgan Stanley¡¯s global-technology group, advised him to tap into the European market, and so in February, Amazon sold $672 million in convertible bonds to overseas investors. This time, with the stock market fluctuating and the global economy tipping into a recession, the process wasn¡¯t as easy as the previous fund-raising had been. Amazon was forced to offer a far more generous 6.9 percent interest rate and flexible conversion terms ¡ª another sign that times were changing. The deal was completed just a month before the crash of the stock market, after which it became exceedingly difficult for any company to raise money. Without that cushion, Amazon would almost certainly have faced the prospect of insolvency over the next year."

If Jeff Bezos and his team had waited a few weeks longer to raise those extra funds, people today would have included Amazon in the list of other dot-com-era failures.

Also Read: Explained: How Much Of Your Money Is Insured If A Bank Collapses

9. Sbarro

Another company that survived bankruptcy is the American pizzeria chain Sbarro, which operates and franchises many fast-food-style pizza and Italian-food restaurants worldwide.

Sbarro went bankrupt not just once but twice: first through a Chapter 11 bankruptcy reorganization in 2011 and then again in 2014 due to too much debt and fewer customers in malls that house many of its restaurants. The company has however, re-emerged with the help of a collaboration of private equity firms to transform the company's image to a more fast-casual style, rather than its previous kiosk or food counter concept, as per Investopedia report.

By June 2014, the Sbarro Pizza chain was officially out of bankruptcy after entering into a plan that allowed lenders to swap $148 million in debt for control of the reorganized business. Last year in its expansion plan, the company said that it aims to open 100 more restaurants.

10. Texaco

American oil giant Texaco, now a part of Chevron (CVX), once dominated the oil industry. In 1984, Texaco agreed to buy Getty Oil, setting off a three-year legal drama that would end with Texaco owing billions to rival Pennzoil.

It all started when Getty Oil and Pennzoil agreed to a merger as per Investopedia report. Texaco swooped in with a bigger offer, snatching away Getty Oil and leaving Pennzoil fuming at the altar. Pennzoil sued for damages. A jury agreed and awarded Pennzoil $11 billion. Texaco reportedly offered to settle for $2 billion, but Pennzoil refused. This is what forced Texaco to seek Chapter 11 bankruptcy protection in April 1987.

However, it bounced back from bankruptcy in December 1987 when Pennzoil agreed to accept a $3 billion settlement.

Also Read: 5 Crypto Firms That Filed For Bankruptcy Besides FTX

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