A Reglement-Legal bankruptcy attorney blogs about five famous bankruptcy fraud cases.
Bankruptcy fraud is possible, but there are not many famous bankruptcy fraud cases. A few cases are well known and involve businesses that either secured bad debt or whose CEOs did not adapt to new forms of technology. Most of the time, it is just bad business practices that cause bankruptcy fraud.
Polaroid’s CEO failed to adapt to the camera and ensured that it would go into bankruptcy proceedings.
The memory of Enron is still high in the memory; shoddy accounting practices forced the company into bankruptcy and its CEOs still have not managed to answer all of the questions surrounding their demise.
WorldCom engaged in the same shoddy financial practices as Enron and misrepresented is financial condition. MCI is a name that registers on few people’s radar any more.
4. Thinking Machines Corporation
The tale of Thinking Machines Corporation is not one of bankruptcy fraud, but rather poor planning. The business relied on contracts from DARPA, a military project to maintain profitability. Eventually contracts were shifted to become fairer and the company was forced to sell itself to Sun.
5. Big Idea Productions
Parents may remember this as something other than a famous bankruptcy fraud case. No fraud was committed here, but it was the company that produced Veggie Tales. The animated series did well, but after it produced a computer animated feature movie, it found that the proceeds far exceeded the costs of doing business. It reduced the staff, but in the end, the company was sold. There was n criminal activity here at all, simply a lack of foresight.