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Is bankruptcy the end of the world?

May 29, 2009

I’ve been following General Motors’ will-it-or-won’t-it situation on its impending insolvency. My own personal opinion has always been the same – let businesses do what businesses do. Go gracefully into chapter 11 if it there is no other way.

In fact in GM’s case, I can think of no better way for it to let go of the past and reinvent itself for the present. So looking on the bright side of things, this is an opportunity.

Now in the US, Chapter 11 does not mean its the end of the road. Wiki says it best:

“Chapter 11 is a chapter of the United States Bankruptcy Code, which permits reorganization under the bankruptcy laws of the United States.”

Indirectly the law recognizes that failure is understandable and a business should be allowed a reprieve to get up, dust itself off and get moving again. There are strings attached of course but still, it is a second chance.

But that’s in the US. This part of the world people talk of bankruptcy like its the end of everything. No, its worse than death. At least people come visit you during Qingming.

Here’s the message it sends. You see a pot of honey on the other side of the cliff but to get there, you must walk a tight rope that stretches to that other side. You know that if you make one slip, you’ll fall to your death. There are no second chances. Still wanna walk the plank?

Personally, I think failure – whether by job loss, financial loss or bankruptcy – is nothing to be ashamed of. Didn’t our parents, teachers and motivational gurus tell us not to be ashamed of mistakes?

But we humans are funny. We’ll tell our kids its okay to make a mistake, then we turn around and shun others who dare make a mistake. Isn’t that why we shun bankrupts? What if it was our own family member that went down?

That’s why I see nothing wrong in allowing GM to file for Chapter 11. What’s the big deal, I say. They let the American Dream happen, they stumbled along the way (who doesn’t?) and they need to get up again. And the stigma of bankruptcy? Well its not created by the party who’s suffering from their mistake. Its created by people who perceive that if you’re a bankrupt, you are a worthless scumbag. And it usually comes from the very same people that tell their kids its alright to make a mistake.

What’s your take?

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5 Comments leave one →
  1. May 29, 2009 2:51 pm

    If you make a small mistake you just add that into the learning curve.
    If you make a big mistake, with someone else’s money thrown in, you tend to take it as a disaster if you’re feel personally responsible.
    But there are folks out there who deliberately squander public money to hide their dirty hands and declare the corporation bankrupt and want our tax money to bail them out without feeling a tint of guilt. That’s the sin we cannot accept.

    Yeah, obviously cheats need to be dealt with, even if their co. didn’t go bankrupt. I too don’t have sympathy for that kind. But what about honest businesses that go belly up, cheated perhaps by a supplier (I know one that got conned in China), or an honest guy who bought a house, lost his job and is unable to pay. Seeing them being lumped with the crooks over bankruptcy is saddening.

  2. May 29, 2009 5:13 pm

    no pain no gain 🙂

    from batman begins
    “why do we fall Bruce?”
    “so that we can learn to pick ourselves back up again”

    For some of us its all pain no gain, lolz.

  3. May 29, 2009 5:57 pm

    Life, they say, doesn’t come with guarantees. You venture, you fall, you pick yourself up and you try again. From the cradle to the grave, it’s fraught with trials and tribulations. It’s not just business. It covers everything we do. From taking the first steps as a baby to your first date and the day you say, “I do”…. these are all risks. Some of us go through it all smoothly. Some take a few punches and go back in for more until we get it right. Luck plays a hand with you, but you have to know when to hold or to run.

    Yes, each life is an 80-year exercise in risk management. We can only reduce, not eliminate risk. One way is by not taking on more debt than we can handle in the worst case scenario. There’s non-financial risks as well, usually in the form of risky behavior.

  4. May 30, 2009 12:42 pm

    It’s never easy to embrace mistakes as brave as we should be doing…..or as brave as other people think we should be. But all i can say is…… life goes on. As comfortable as you are now, it will not last forever. What you need to do is just to be prepared for it and when it’s time, just call it quit with honor. Dont just stay there as if you’re begging for people to keep u.

    this applies to jobs, businesses, etc. If you biz fails, then try to survive but if u cannot, just close it. If you screw up a job, then jst accept the responsibility or resign if u’re asked to.

    That’s why i actually respect some of the leaders in the world – if they made a mistake, they will bear the responsibilities and resign. Unlike some leaders we know who will “beg” to stay where they are jst so that they can gain more $$$ for the retirement.

    People shld jz learn to accept things 😛 At least, u still hv a life and u can always come back from this downfall. 🙂 A lot more fortunate than many people in the world.

    I agree with what you say. Quitting with honor only happens when one’s personal sense of ethics surpasses one’s greed or desperation. The thing is, finding people with the ethical values to do the right thing when the time comes is very, very difficult. We might not even find it between the walls of our corporate offices.

  5. May 31, 2009 12:09 pm

    There goes the misuse of such philosophies as:
    Wining at all costs
    Never say die
    When the going gets tough, the though get going
    Etc, etc…

    I just wonder what ‘s happened to philosophies like ‘Quitting with honor’ or if there are still people with ethical values anymore. They don’t seem to make newsworthy items.

    Yeah, its under-reported. Which headline do you think sells more papers, “Man did an ethical thing” or “Man did an unspeakable thing.” 🙂

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