Rapper 50 Cent was recently quoted as saying, “Walt Disney and Donald Trump filed for bankruptcy,” when explaining to press why he chose to file for Chapter 11 himself. But comparing Donald Trump to Walt Disney where business strategy is concerned is like comparing the proverbial apple and orange - the two are unique, and a lot can be learned from both.
A Chain Reaction
In 1920, Walt Disney filed for Chapter 11 bankruptcy after one of his major backers filed for bankruptcy. Prior to this supporter going broke, Disney had begun his own studio named Laugh-O-Gram Studios and had started to hire animators and support staff. Once the company that financially supported Disney’s venture went bankrupt, Disney no longer had money to pay his crew or keep his studio afloat. This led him to file for Chapter 11 and close up shop.
By selling his video camera, Disney gathered enough funds to buy a one-way train ticket to Hollywood. While Laugh-O-Gram Studios was no more, Disney eventually began the company that we know today (using his own name this time around). So while Walt Disney did file for Chapter 11 early in his career, he did not use the bankruptcy umbrella in the same way that Donald Trump does.
A Difference In Style
50 Cent was not wrong when he stated that Donald Trump and Walt Disney both filed for Chapter 11, but these two entrepreneurs are unique. Disney’s main goal was to get one of his films to a distributor, and this could only happen with money to keep his studio afloat (Alice in Wonderland was the first Disney movie produced, incidentally). Once Disney closed the Laugh-O-Gram Studios doors, he set out to start a new production company. After that, he didn’t use Chapter 11 again.
Donald Trump, on the other hand, has used Chapter 11 as a business strategy. When Trump purchases a property that is not doing well financially, his second step is often to file Chapter 11 in order to relieve debts and restructure the company. Frequently, he then sells the company for a higher profit and moves onto the next property using the same or similar strategy. As you can see, these strategies are quite different from one another.
If you closely study the various methods used by both Trump and Disney, one thing will become apparent: you have various options when it comes to a decision to file for Chapter 11. This form of bankruptcy can be used as a business strategy (like Trump often does), or it can be used to close up your business when you can’t pay lenders and start anew (like Disney did). There are other subtleties to Chapter 11 as well, and all of those options are at your disposal if you work with the right bankruptcy attorney.
If you are considering Chapter 11, know that you do have various options. There’s no one way to do business, but there is a way that’s right for you. Call us at (800) 391-4337 or schedule an appointment for a free case consultation online.