Unless you have been living under a rock, you have heard that AMR[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][1] Corporation is in Chapter 11 bankruptcy reorganization. AMR is the 100th airline[2] to declare bankruptcy since 1990. While the bankruptcy itself has garnered a lot of attention, the ripple effects and unintended consequences have gone under the radar.
The primary reason that companies enter Chapter 11 bankruptcy is to cut costs while they are protected from creditors. Not surprisingly, AMR has announced massive layoffs. Doubtless other employees will have their hours cut or their compensation reduced. AMR may be bought out by U.S. Airways. Just as you get rid of a lot of furniture if you consolidate houses with another person, additional layoffs usually accompany a corporate takeover.
When a lot of jobs leave the local economy, everyone feels the effects. Consumer spending goes down; consumer borrowing goes up. Charitable donations go down; charitable needs go up.
Downsizing to reduce costs is a lot like punting on 4th down: no one will criticize the tactic, even though the theory may be flawed. We are only now beginning to understand all the consequences of downsizing, and those consequences are “consistently negative” all across the board.
Consumer Bankruptcy
A consumer bankruptcy may be nowhere near the scale of the AMR bankruptcy, but there are still ripple effects and unintended consequences. The legal professionals at Henley and Henley, P.C. understand that a bankruptcy is more than a number. We understand the total impact of a bankruptcy, and its fiscal, physical, emotional, and social fallout.
All that being said, bankruptcy can be an excellent tool to provide your family with many of the things that they need. Bankruptcy is not free or even cheap, but it is usually worth the cost. Call today for your free consultation.
[1] Where did the name “AMR” come from? The initials are simply the New York Stock Exchange’s initials for American Airlines. AMR is a holding company created in 1982. The company owns American Airlines, Trans World Airlines, and American Eagle.
[2] The 100th customer usually gets some sort of prize. No word yet on whether AMR will receive a coffee mug or a t-shirt or anything like that.
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