The Sharper Image and DiamondJacks Casino File for Bankruptcy

In a February 20, 2008 press release, The Sharper Image has announced that it has filed for bankruptcy protection under Chapter 11 of the United States Bankruptcy Code.  The Sharper Image is home to some of the most unique high-end electronic gadgets with a strong customer base throughout the world.  According to the press release, “the Company intends to continue to conduct business as usual while it devotes renewed efforts to resolve its operational and liquidity problems and develops a reorganization plan.”

A March 12, 2008 news story by KTBS 3 reports that the DiamondJacks Casino has also filed for protection under Chapter 11 of the United States Bankruptcy Code.  The casino states that no employees will lose their jobs however a drawn-out contract dispute is partially to blame for the bankruptcy filing.  The other reason cited for the bankruptcy is the extra resources that are needed to complete the casino’s renovation project.

These two companies, The Sharper Image and DiamondJacks Casino (owned by Legends Gaming), don’t have much in common among a cursory examination.  However, they are two previously successful companies who are suddenly being forced into bankruptcy court.  The Sharper Image stated its plans to continue with business as usual despite mismanagement of the company’s expansion plans. 

DiamondJacks Casino will also continue to operate at full capacity even though its bankruptcy is a result of a poorly estimated renovation project as well as a contract labor dispute.  Are these companies taking the easy way out?  When consumers mismanage or poorly estimate their financial future they can’t continue operating as if nothing is wrong while going through bankruptcy proceedings.

Another question that begs to be asked is whether the corporate bankruptcy guidelines need to be overhauled again.  Changes were made to corporate bankruptcies in the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) but perhaps these changes need to be looked at and refined.

Sources:  Sharper Image Corporation Press Release, KTBS 3