What I learned watching three companies go bankrupt

I do not usually lead with this.

I was inside three companies that filed Chapter 11.

Art Van Furniture, March 2020. I was VP of Omnichannel under Thomas H. Lee Partners, and I was there at the filing. JCPenney, May 2020. I was Head of Digital, and I had left 12 months before. Conn's HomePlus, July 2024. I was Chief Digital Officer, and I had left 18 months before.

Three categories. Three boards. One pattern.

The companies did not die because consumers changed. They died because their capital structures collided with cyclical consumer demand.

Three filings, one cause

Art Van was a leveraged buyout that loaded debt on a furniture cyclical in 2017. The pandemic was the trigger, not the cause. The cause was the structure.

JCPenney was a decade of debt-financed transformation attempts. Each CEO inherited the last one's debt and had no margin for error.

Conn's was something else entirely. The retail business was a front door. The actual model was subprime financing, 61 percent of purchases. Without the share buybacks, Conn's would not have had to file.

Look at them side by side and the surface differences fall away. Different categories, different decades, different boards. The same mechanism underneath each one. A furniture retailer, a department store, a credit business dressed as a store. None of them failed because the people stopped doing the work or because the customer walked away. They failed because the structure left no room to absorb a turn that was always coming.

The capital structure is the silent governor of every operating decision. When it is healthy, the team has options. When it is fragile, the team has none.

That is the lesson I carry out of all three. The operating work was honest in each case. The room to do that work was not.

Two questions before the next seat

I now ask two questions before any next CEO seat, and I do not move forward until I have real answers.

One. Show me the debt schedule, the covenants, and the worst-case six quarters. Then tell me what we do if it hits. "We figure it out" means walk away. "Here is the recapitalization plan" means a board worth working with.

Two. Does the cycle profile of the business match the debt profile the board imposed on it? If not, you are operating in a trap. A cyclical business carrying a structure built for steady cash flow is not a turnaround opportunity. It is a countdown.

These are not financial questions disguised as operating ones. They are the operating questions. They decide whether the team you are about to lead has options or has none, before you have made a single decision. I learned that the hard way, three times, inside companies where good people did honest work and still ran out of room.

A note for sponsors

For PE sponsors, one thing is worth saying plainly. Operators have memory.

The sponsors who structure for the CEO to win get the better CEOs over time. That is not sentiment. It is selection. The people who have lived through a structure that did not let them win remember exactly who built it, and they choose accordingly the next time around.

The work is the same, the room is not

I scaled SelectBlinds to a clean PE exit in 2024. The capital structure worked. The operating system worked. The exit happened.

That outcome was not a different kind of work than the work I did at Art Van, JCPenney, or Conn's. It was the same work in a structure that allowed it to land.

If the capital structure is broken when you walk in, walk back out. If both systems are healthy, you have the room to do the work.

The work is the same. The room you get to do it in is not.