When e-commerce company Boxed went bankrupt, its SaaS division, Spresso, was spun out. The deal was facilitated not by equity investors, but by debt holder BlackRock, who saw value in the technology and team, converting their position into a new structure for the spin-out.

CEO Sean Nelson reframes his company's early Chapter 11 bankruptcy not as a failure, but as an invaluable, real-world education. The experience provided a deep, practical understanding of contracts and high-stakes business operations that now informs his decision-making and gives him a unique perspective.

Explosive growth after a Shark Tank appearance created a massive cash flow problem. The four-month lead time on inventory meant the company had to fund orders 8-10 times larger than their current bank balance, pushing them to the financial brink.

In a near-death scenario, Ladder successfully negotiated with major creditors by convincing them of the real possibility of getting zero. This little-discussed survival tactic was key to cleaning up their balance sheet, demonstrating that even large institutions will negotiate when faced with a total loss.

Founder Sean Nelson reframes Chapter 11 bankruptcy not as a failure, but as an invaluable, real-world education. It provided a raw understanding of contracts, leases, and high-stakes decision-making that is impossible to learn academically. This crucible experience ultimately made him a more resilient and knowledgeable leader.

Contrary to the narrative that PE firms create leaner, more efficient companies, the data reveals a starkly different reality. The debt-loading and cost-cutting tactics inherent in the PE model dramatically increase a portfolio company's risk of failure.

Lego's near-bankruptcy, while terrifying, created the urgency needed to abandon gut-feel decision-making. This "burning platform" forced the adoption of data-driven processes and a focus on profitability, which was critical for its long-term survival and success.

Founder failure is often attributed to running out of money, but the real issue is a lack of financial awareness. They don't track cash flow closely enough to see the impending crisis. Financial discipline is as critical as product, team, and market, a lesson learned from WeWork's high-profile collapse despite raising billions.

Unlike a Chapter 11 bankruptcy where companies restructure, Sonder filed for Chapter 7, signifying complete liquidation. This meant an immediate shutdown and asset sale, causing thousands of guests to be abruptly evicted. The event serves as a stark real-world example of the severe and immediate consequences of this terminal form of corporate failure.