There is a place and time for Bankruptcy.  The nice thing about bankruptcy is that you can file it at the last minute and freeze everything in time and space.  What that also means is that you should try every other conceivable alternative before filing bankruptcy.  It will stop an evicting landlord or foreclosing bank, dead in their tracks.  The good news is that the bank and landlord also know that, so they don't really want to push you into bankruptcy.  Here comes the catch 22. Once they do push you into bankruptcy they can petition the courts to lift the stay based on the basis of being "harmed", in other words you going further into debt with them.  The result can be that they are relieved from the bankruptcy and for them it's as if it never existed. Now you a have real problem!

This means that if there is someone who knows the game and can negotiate on your behalf, the realization that you might declare bankruptcy has more weight than actually pushing the button.  Someone who says they are going to blow us off the map and has the capability to do so, carries more weight than someone who actually tries to blow us off the map. Once they pull the trigger, all bets are off and it's dog eat dog.  It is surprising how many successful negotiations can be reached when presented properly, by a person who has the skill sets, understands the alternatives and can maintain a level head.  If your company goes away, the creditor's opportunity of collecting from you goes away with it.  Also they lose any business you once could have given them going forward and that can be worth more than five times what they are owed.  On top of these reasons the odds of surviving a bankruptcy are strongly against you since 87% of companies who file do not survive reorganization.  Half of the remaining 13% do not come out as the same company that went in.  That's a 93% failure rate. Not very good is it?

The truth is that most companies file Chapter 11 reorganization because they think that is the only way to relieve the pressure of pursuing creditors.  There are many ways of slowing or stopping creditors who are pursuing you, without having to file. Even those who are relentless can for example, be stopped by a bankruptcy filing long enough to negotiate and then dismiss the bankruptcy once terms have been agreed to. 

So what does this all say to us?  If you are going into bankruptcy reorganization, you had better not go into it thinking you will just come out the other side all better.  Instead go into it for specific attainable reasons with a plan of how you will get back out of it.