Plastic container-manufacturing company Tupperware has formally filed for bankruptcy, with its president and CEO Laurie Ann Goldman citing financial struggles brought about by the “challenging macroeconomic environment” in a statement.
The 78-year-old brand, founded by inventor Earl Tupper, who developed the first Tupperware products in 1946, has seen ups and downs throughout its existence—mostly ups between the 1950s and 1960s when “Tupperware parties” were a thing. Its direct sales business model made it a household name, and so it stuck to it for more than seven decades and only started selling products in retail settings in 2022.
Just a year after Tupperware’s bold move to start selling its plastic food storage containers in Target stores, however, Tupperware disclosed in a regulatory filing that it had sought help from financial advisers as it was already struggling to stay afloat financially.
On Tuesday, Tupperware officially filed for bankruptcy. But despite the negative connotation of the term, filing for this legal process does not necessarily mean the end of the road for a business. Instead, it presents new opportunities that could lead bankrupt companies to flourish in the long run.
Understanding bankruptcy in a business context
By definition, bankruptcy is a legal process businesses take when they can no longer realize their financial obligations. There are different types of bankruptcy filings, but all of them are designed to protect businesses from creditors as they figure out and reorganize their finances. In the corporate world, Chapter 7 and Chapter 11 bankruptcies are the most commonly used by struggling companies.
Chapter 7 bankruptcy is when a company decides to cease all operations and liquidate assets to pay off debts in preparation for the closure of the business. On the other hand, Chapter 11 bankruptcy gives businesses the time to restructure their debts without stopping operations. When companies file for Chapter 11, they are holding out hope they will return to normal business operations in the future.
In Tupperware’s case, the Orlando, Florida-based company filed for Chapter 11 bankruptcy protection, saying it would continue paying its employees and suppliers amid the proceedings.
“We plan to continue serving our valued customers with the high-quality products they love and trust throughout this process,” Goldman said in the statement. She added that the bankruptcy filing “is meant to provide us with essential flexibility as we pursue strategic alternatives to support our transformation into a digital-first, technology-led company.”
Breaking the stigma surrounding bankruptcy
While many view the notion of filing for bankruptcy as a last resort, several successful conglomerates and businesses have actually resorted to this strategic move in the face of financial crisis. Pivoting during hard times requires being prudent and tactical. Filing for bankruptcy—particularly the Chapter 11 type—gives businesses leeway to better manage their financial burdens and come out stronger.
American Airlines, Delta, General Motors and Marvel are just some of the companies that benefited from bankruptcy filings. After reducing debts, renegotiating labor agreements and refocusing on more profitable projects, these brands were able to exit bankruptcy, start anew and thrive.
The idea of corporate bankruptcy being a mark of a firm’s imminent death has drastically changed through the years, after seeing how many corporations have been able to bounce back during the bankruptcy period. Today, more business owners, investors and creditors consider bankruptcy as either a restart button or a sign that a company is willing to take risks and carry out a long-term strategy for recovery.
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