Can a company be profitable and still go bankrupt?

Question

Can a company be profitable and still go bankrupt?

Answer 1

Yes, a company that is profitable can go bankrupt. That just happened to a gambling casino in Detroit. The casino was profitable but a recent expansion with the addition of a 415 room hotel overextended their ability to pay for the additional financing costs. Until the addition was completed and contributing to the bottom line they were unable to service the debt.

They filed a Chapter 11 bankruptcy to reorganize their debt.

Answer 2

Well, yes.  Considering going bankrupt is when you are unable to repay debts, you could be in debt but still maintaining a profit.  But if you have the money to repay the debts, I'd imagine it would be almost impossible to actually declare bankruptcy.  You'd have to have far more debt then profit.

Answer 3

Debts must far exceed assets.  If a business is profitable, this shouldn't be the case.

Answer 4

If they arent managed well, or someone realy doesnt like the company then sure why not.

Maybe a bomb blows up half the building, they gotta rebuild that thing. Fixing things costs money.

You guys have to think outside of the box.