SkyMall Just Filed for Chapter 11 Bankruptcy — But What Exactly Does That Mean?

Airplane in the sky at sunset
Barely a month into the new year, American travelers were confronted with some sad news: SkyMall, the company that provided paper catalogs, which were filled with infamously useless products and which were placed in every airplane seat for over 25 years, had just announced that it plans on filing for bankruptcy.

Plenty of articles and blog posts were composed “in tribute” to the company that provided airline passengers with entertainment for so long, but plenty of people are also looking into the details and long-term implications of SkyMall’s bankruptcy announcement. After all, the company (somehow) managed to stay afloat for decades, and its business model, target audience, and product lines never really changed. To many people, the bankruptcy seems completely out of the blue.

But it’s important to realize that many businesses end up in similar situations, and like SkyMall, these businesses usually end up filing for Chapter 11 bankruptcy.

So now for a few questions (and answers) about what SkyMall is dealing with, and what it means to file bankruptcy under Chapter 11:

What is Chapter 11 bankruptcy?
This is typically the type of bankruptcy filing that businesses use (as opposed to Chapter 7 bankruptcy and Chapter 13, which are geared toward individuals). Under Chapter 11, the business in question receives legal protection while restructuring the company, so that it can pay off the majority of its debts — and sometimes the company is allowed to continue operating, if it can bring in enough sales.

How long does Chapter 11 bankruptcy last?
The average Chapter 11 bankruptcy timeline tends to be much shorter than a Chapter 13 bankruptcy timeline — for small businesses, it’s typical for a repayment plan to last anywhere between a few months to one year. Chapter 11 bankruptcy timelines tend to be pretty flexible, however, and depends on the size of the company and the amount of debt.

Can a company become successful again if it repays its debts within the Chapter 11 bankruptcy timeline?
Just like an individual bankruptcy case, it is possible for companies to become successful again — but it’s incredibly difficult, especially for a big company like SkyMall.

With all of this being said, it seems unlikely that SkyMall will continue operating and distributing catalogs for plane passengers (for better or worse) — online advertising and the ability to use Smartphones during takeoff seems to have taken a big chunk out of its market share — but SkyMall’s dire future shouldn’t be an indication of the bankruptcy process for everyone. With a little legal help and a lot of reorganization, it’s very possible for people to become financial stable and successful after filing for bankruptcy.