Bankrupt companies benefit from cooperation with suppliers during legal process

When a company declares bankruptcy, the spotlight often falls on its creditors, primarily focusing on corporate debt from financial institutions. However, it is crucial to acknowledge the significant role of suppliers in the company's journey through bankruptcy. While financial institutions play a key role, suppliers can also be instrumental in the company's successful emergence from bankruptcy proceedings. Suppliers stand to gain more by supporting their buyer's recovery instead of witnessing the liquidation of assets. Their active participation in bankruptcy proceedings becomes paramount.

Associate Professor Vivek Astvansh emphasizes in the Harvard Business Review that it is imperative for suppliers to be actively involved. Adopting a cooperative approach during legal processes signals an intention for ongoing collaboration, bolstering the prospects of reorganization rather than dissolution. This cooperative stance benefits both parties involved, fostering a mutually advantageous outcome.