–Sharon Armstrong, Attorney

I came across an interesting article in Yahoo!® Finance the other day, which gave a little bit of insight into the financial woes of some famous brand-names currently in bankruptcy. The article itself consists largely of straightforward facts and figures about these companies, but it raises a couple of interesting points about the effect of bankruptcy on branding and trademark rights and vice versa.

The immediate question is, what happens to a brand, let alone any accompanying trademark rights, when a business goes bankrupt? The outcome likely depends on whether an organization enters Chapter 7 liquidation, in order to dismantle the business and sell its assets, or Chapter 11 reorganization. If I were a bankruptcy attorney, I promise I’d share all the answers with you, but since I’m not, you can read about some of those issues here.

As a trademark attorney, I think a more interesting question is whether the act of entering, going through and subsequently surviving bankruptcy, in some weird, this-only-happens-in-America sort of way, can actually be a badge of honor, and a branding tool to boot.

Case in point: GM. Like virtually all of the companies featured in the Yahoo! article, GM is in the midst of massive reorganization and restructuring. And, like the others, GM is a famous brand (perhaps the most famous among this group). And, as was likely a consideration in the reorganization of the other brands, the strength of GM’s brand undoubtedly had something to do with the decision to reorganize GM in the first place – why give up on an established market of consumers who love an (albeit unprofitable) brand if it can emerge from bankruptcy New, Improved and More Profitable?

Unlike the others, however, and as far as I can tell, only GM has started its own Web site not simply to discuss its bankruptcy reorganization, but to use it as a platform to reshape its image and to discuss its reformation.  In this way, GM appears to have viewed it bankruptcy as an unprecedented opportunity to reach out to consumers and to discuss GM’s “reinvention” and other topics “re: invention.”