According to EUROSTAT, seasonally adjusted bankruptcy declarations in the EU fell by 0.7% in Q4 2024 compared to Q3 2024. Throughout 2024, companies filing for bankruptcy frequently cited rising interest rates, persistent inflation, increased labour costs, and shifts in consumer behaviour. Looking ahead, experts warn that these pressures are unlikely to ease.
In addition, potential repercussions from President Trump’s tax policies—including trade tensions, financial market volatility, and EU countermeasures—could further increase bankruptcy risks, particularly for undercapitalized firms in vulnerable sectors.
Five rules on how CEOs can successfully manage a company bankruptcy
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Stay calm and take responsibility.
Mindset first: Show steady leadership and avoid panic—the tone from the top matters. A CEO in crisis demonstrates a steady mindset by first grounding themselves in clarity and purpose, even when the situation is uncertain or rapidly deteriorating. Rather than reacting emotionally or getting caught up in the chaos, a CEO pauses to assess the reality of the situation, however harsh it may be. This doesn’t mean suppressing emotion or ignoring the gravity of the crisis—it means acknowledging the difficulty while focusing on what can be done next.
Transparency: Don’t sugarcoat the situation, but also don’t create unnecessary fear. In the face of bankruptcy, openness in a CEO’s communication is essential to maintain trust and guide the organization through uncertainty. Being transparent means openly sharing the reality of the situation—what’s happening, why it’s happening, and what the next steps might be—without hiding behind jargon or vague reassurances. It’s important not to sugarcoat the situation; employees, investors, and partners deserve to hear the truth. At the same time, the CEO must avoid creating unnecessary fear. Striking this balance—honesty without alarmism—helps people stay focused, reduces damaging speculation, and preserves credibility when needed.
2. Expert Advice
Get expert advice on insolvency law, restructuring options, and personal liability. Insolvency laws vary by jurisdiction, but one common thread is that once a company is insolvent (or nearing insolvency), your responsibilities as a CEO shift. You’re no longer just acting in the best interest of shareholders—you must also consider creditors. Missteps here can result in personal liability, including being held accountable for wrongful trading or delayed filing for insolvency. A lawyer specializing in insolvency can help you assess whether restructuring, administration, or liquidation is the right path—and can often spot opportunities or compliance issues you wouldn’t know exist.
Consider turnaround advisors, insolvency specialists, and M&A advisors for potential sales or restructurings. Turnaround advisors bring deep experience in stabilizing distressed businesses. They can help prioritize cash flow management, renegotiate contracts, restructure teams, and communicate with stakeholders—often with a perspective that’s hard to see from the inside. An M&A advisor might help find a strategic exit: Sometimes, a distressed sale might save the business (or part of it), retain jobs, and satisfy creditors more than a liquidation would. M&A advisors specializing in distressed assets have networks and skills to move fast and confidentially—timing is everything in such situations.
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Evaluate All Strategic Options
Before proceeding with formal bankruptcy, the CEO must quickly assess all strategic alternatives. This includes evaluating the business holistically—operationally, financially, and legally.
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Restructuring or Turnaround
Start by exploring whether the business can still be turned around. This could involve renegotiating debt terms with lenders, cutting operational costs, or selling non-core assets to raise liquidity. Stabilizing cash flow or restructuring internal teams can sometimes buy critical time and avoid insolvency altogether.
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Bridge Financing
Assess whether short-term financing is possible. A cash injection—through existing investors, emergency credit lines, or government support—might provide a financial bridge to recovery. Be realistic: consider your burn rate, repayment ability, and whether the business fundamentals support further investment.
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M&A – Strategic Exit or Distressed Sale
Explore whether a strategic sale, joint venture, or merger might preserve the business. Distressed M&A can be a viable way to save parts of the company, retain key jobs, and satisfy creditors more effectively than liquidation. Seek advisors with experience in distressed transactions—they can move quickly and discreetly, which is essential when time is tight.
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Bankruptcy Protection
If you think bankruptcy is inevitable, please act decisively. Delaying the process can expose the CEO and board to legal risks. Work closely with legal counsel to select the best legal framework based on jurisdiction—for example, Chapter 11 in the U.S., or a moratorium under Swiss law. Timing is crucial. Filing too early can limit strategic options; too late, and legal liabilities increase.
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Take Care of your Employees
One of the CEO’s most important responsibilities is caring for the people who have built and supported the company. First and foremost, the CEO must ensure that employees are paid what they are legally and ethically owed—this includes final salaries, unused vacation, and any severance obligations where possible. Even in the face of financial collapse, respecting these commitments shows integrity and honors the contributions of the team.
Supporting employees through the transition is equally crucial. This might mean providing strong recommendation letters, connecting them with job opportunities through the CEO’s network, or organizing outplacement services. While sometimes simple, these gestures can have a meaningful impact on someone’s next step and reflect well on the company’s values even in its final days.
Finally, the CEO must remain visible and accessible. Leadership becomes intensely personal in times of crisis. People don’t just want information—they want presence. Being there to listen, answer hard questions, and show empathy goes a long way. It’s not about having all the answers; it’s about showing up with humanity and courage when it matters most.
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Protect Your Integrity—and Build Mental Resilience
Facing bankruptcy is not only a professional crisis—it’s a deeply personal one. A CEO must learn to cope with the emotional weight of the situation while continuing to lead. The pressure is intense, but decisions made now can have lasting legal and reputational consequences. Avoid missteps such as wrongful trading, favouritism, or lack of transparency. Document all key decisions to demonstrate that you acted responsibly and in the company’s best interest. Lead with ethics and compassion, especially in difficult conversations, on how you treat people—employees, creditors, stakeholders—matters. In moments like these, your behavior will define your legacy. Acting with integrity safeguards your professional future and strengthens your personal resilience.