Tier-One Legal Advice

Should you invest in a company with an uncertain future?

by | Jul 23, 2021 | Firm News |

Investing in a company with significant financial troubles is a risk. However, every savvy investor understands that to reap great benefits, one must take certain calculated risks. In the case of a company facing bankruptcy, you may find that the benefits of the company’s brand or reputation far outweigh its current struggles.

A business can come back from the brink

Businesses are very resilient, and there is no shortage of stories of companies reviving from close calls. One of the most famous examples comes from the entertainment industry.

In the 90s, a major comic book publisher sold the film rights to many of its most famous characters. This sale was part of their bankruptcy management and let the company remain open and refocus. Today that brand is among the most profitable properties in the world.

It takes a lot of insight into an industry and considerable fortitude to see through a purchase as fraught as a struggling company, but it can prove hugely profitable.

Gaining perspective on struggles through bankruptcy law

Investors would benefit from a stronger understanding of the various debt management and consolidation options available to businesses through bankruptcy. A company struggling may face bankruptcy and be acquirable at a low price, but with a seasoned, steady approach to managing that bankruptcy process, a brand can be easily rehabilitated.

Section 363 of the bankruptcy code governs much of this process, and you may face codified restrictions in the form of court dates and so forth. However, if you committed yourself to acquiring a “distressed asset,” you have options.

The goal is minimizing risk and maximizing outcomes

While there are few guarantees in investing or business acquisition, success is much more achievable with the right team and the proper guidance.