Zuckerberg Bankruptcy Law Office

"Saved by the bell" might be the best way to describe the latest news about Realogy.
Back in February of this year, there was speculation Realogy, owner of Coldwell Banker, ERA, and Sotheby's franchises would enter bankruptcy. At the time Realogy, the largest real estate firm in the country, was trying desperately to refinance its debt, and one refinancing deal had already been turned down by a judge.

Mark Panus, the Senior Vice President of Corporate Communication for Realogy told the Staten Island Real-Time News that his company had reduced its overhead by more than $350 million while still trying to grow through new franchise sales. Then, in March, Apollo Management committed $150 million to help Realogy weather the storm and avoid bankruptcy.

A second company that has managed to avoid bankruptcy is Rite Aid, the nation's third largest drugstore chain. In this case, according to Bloomberg News Service (May 11, 2009) bank negotiations progressed successfully and Citigroup stock analysts began reporting that "suddenly a business on a crash course once again looks worthy of investment."

A third well-know corporation did not fare as well.  Just a week and a half ago, Six Flags theme park company declared bankruptcy. The plan is to reorganize and to shed $1.8 billion of debt.  Despite having hosted 25 million visitors in 2008 and posting record revenues, the company "needed to do something about its crushing debt load."

These three corporate stories of bankruptcy and near-bankruptcy highlight the fact that companies decide to declare bankruptcy for different reasons.  The website MillionaireACTS lists some of these:

               Liquidity - When sales and revenues drop, cash flow dries up.

               Timing of Expansion - Companies bought other companies or opened new
                                outlets, but business didn't support the growth.

                Default on Loans - When a corporation fails to make payments, the lender can
                                 demand a total repayment of the loan.

                Loss of Investor Confidence - Company gets a bad rating by analysts and
                                shareholders dump the stock.   
       
It's almost uncanny how similar these reasons are to the forces that drive individuals to seek my help in filing bankruptcy.

"Liquidity" dries up, typically due to a job layoff and/or family medical expenses. 

"Expansion plans" might include the family having moved into a new home or taken on some other debt before the job loss, ultimately causing default on loans. 

The fall in real estate values makes it impossible to get capital through refinancing of home loans,
 
and lender "loss of confidence" tightens credit card limits and terms. 

The insurmountable combination of all these pressures drives consumers to seek the safety net provided by the bankruptcy court system.