Bankruptcy doesn’t mean that the good times are all in the past.
There’s the future, too.
Both the individual and society reap benefits from bankruptcy in ways that you may have missed.
So, in my view, Jay Fleichman’s analysis of the bankruptcy of Halsey Minor, the founder of CNET and once a very rich man, didn’t go far enough.
Win some, lose some, said Minor.
Jay added, Don’t lose sight of the benefits to the society that preceded Minor’s crash.
The good before the crash
Minor’s ideas and entrepreneurship created jobs, technology, and wealth.
And then the fruits of the first success soured. Minor’s subsequent ventures failed.
He filed Chapter 7 and tossed in the towel on this chapter of his business life.
The good to come
But that won’t be the end of the story nor the end of the benefits to the country as a whole.
I’ll bet dollars to doughnuts that Minor starts another business, invests in a success, or shares his knowledge with others, after the bankruptcy.
That, for me, is the priceless consequence of bankruptcy.
The person who has filed bankruptcy and discharged his debts is freed up from the shackles of a financial disaster. They don’t have to lurk in the underground economy, dodging creditors, hiding money, and laying low.
Their economic energy is liberated. We all benefit.
The possibility that someone won’t be able to pay their bills is built into the price of commercial products. It doesn’t come as a surprise to an astute manager that there will be some failures. ( Non commercial transactions like loans within families and personal injury suits don’t do so well in bankruptcy because they’re not market driven).
Business cycles, bad luck,or bad judgment can generate a personal financial crisis.
But like the Phoenix rising from the ashes of its own funeral pyre, bankruptcy debtors live to be be productive again.
Image in the public domain via Wikimedia.