Bankruptcies used to be shameful, now it’s a strategic tool used by customers to decide when to shed creditor debt and to force their senior secured lenders, junior secured lenders, and mezzanine lenders to continue to provide capital. For challenged companies, it’s no longer a question of “should we”, but rather “When will we... for our best benefit”.
Many companies know that the cost of litigation and pursuit for unsecured receivables is far too exorbitant, unless the amount is substantial (over 100K in the US, and over 250K in foreign markets). As such, some companies will simply default on the credit, knowing there’s little that can be done. This generally happens when a competitor comes forward with a better pricing option. We all want to sell on value, but sometimes our customer’s don’t buy on value.