Originally Posted by David Murphy
I am personally a skeptical of the idea that anyone is really better off by allowing businesses to restructure under Chapter 11 as Kodak did. A break up and sell-off of assets may in fact be more efficient and in the long run may be more beneficial to society in terms of created jobs and efficient commerce. In fact, I get the impression that Chapter 11 is actually used as a weapon in management-labor relations - against labor. I believe part of the original rationale for it was just the opposite - to save jobs.
How many companies actually recover well and benefit their employees substantially post-Chapter 11? I'm not sure, but it does not seem like very many, and so far Kodak seems to typify this (as a casual outside observer of economic matters).
I share your concerns. Some companies do survive Ch. 11. GM and Chrysler both went bankrupt and survived, as did several airlines. The problem with Kodak is that they have not solved the problem that caused them to go bankrupt the first time. They have been shrinking ever since they emerged from bankruptcy because the core problem remains. Their film business cannot sustain the size company that they are, and so they shrink. Fixed costs are going nowhere and they need more and more revenue sources to cover those costs.