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Taking the time to recover after filing for business bankruptcy

When a person suffers an illness or injury, treating the problem is only the first step toward health. After the problem is treated, the body takes time to recover and heal. The same could be said for businesses.

If you own a small business and need to file for bankruptcy, the bankruptcy process can help you eliminate or restructure debt and put your business back on the path to health and profitability. But as with the body, this transition takes time. It may take months or even years to begin seeing profits again.

A good example of post-bankruptcy rebuilding is Eastman Kodak Co., most commonly known as just Kodak. The iconic camera company has been around since the 1880s, and its name has become a fixture in the American lexicon. When someone says “it’s a Kodak moment,” the reference is well understood.

But readers may remember that Kodak ran into financial troubles because company officials did not accurately predict and respond to consumer tastes. The company actually invented the digital camera in 1975, but chose to keep its focus on photographic film instead. This proved to be a colossal mistake, as history has shown.

In January 2012, Kodak filed for bankruptcy. The company emerged from bankruptcy in September 2013 with a different focus and a more efficient operation. According to the Wall Street Journal, however, Eastman Kodak Co. just posted its first profit since that time. And although things are looking up, the company remains cautious. Kodak’s chief CEO said that “Kodak continues to operate too closely to our break-even point.”

The lesson here is simple but nonetheless worth mentioning. And that lesson is: recovery takes time. If your business is threatened by serious debt and an unprofitable strategy, bankruptcy can help you reorganize, restructure and turn things around. But once you have corrected course, becoming profitable again usually requires some patience.

Source: The Wall Street Journal, “Kodak Records First Profitable Quarter Since Bankruptcy Protection,” Maria Armental, Nov. 4, 2014

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