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Some struggling companies seek bankruptcy protection

During the lifecycle of a company its fortunes will typically wax and wane at intervals, but there are some times so difficult that a company stands on the threshold of financial insolvency. Perhaps an entry into a new market fails to produce anticipated gains or a product does not catch on with consumers. Maybe broader economic developments diminish a company's position relative to its competitors.

Last week, 24/7 Wall St. compiled a list of 10 companies it anticipates will no longer exist next year. Some companies, such as Pacific Sunwear, have fallen victim to heavy competition from larger retail stores. Others, such as American Airlines, had difficulty responding to sweeping changes in its market. American's parent, AMR, a previous subject of our Chicago blog, is currently going through Chapter 11 bankruptcy.

Another company, auto manufacturer Suzuki, has seen declining sales in recent years as negative reports about product quality may be influencing consumer choices. After being a dominant player in smartphones before Apple entered the market, Research in Motion is another business that has fallen on hard times. Currently the company owns a 10 percent market share in smartphones, but as recently as 2009 that number was 44 percent.

Not all of these brands and companies will survive. Some may find buyers who covet their technology, patents or brand names. But periods of significant financial challenges do not necessarily signal doom for a business, whether large or small. Depending on a company's situation, filing for the protection of Chapter 11 bankruptcy is an option that can help put it back into a profitable market position after it has eliminated and restructured its heavy debt load.

Source: 24/7 Wall St., "Ten Brands That Will Disappear In 2013," June 21, 2012.

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