There’s a new trend in the branding world (well, not entirely new, but certainly growing in popularity lately) — reviving brand names from the depths of bankruptcy (via the New York Times). Recently, Linens ‘n Things, Sharper Image, Bombay, Halston, and CompUSA have all been given a second chance at life — albeit a shadowy version of their former lives — thanks to liquidators (they prefer to be called “asset recovery specialists”).
So what exactly is going on?
Well-known brands that are victims of corporate bankruptcy are being sold for millions of dollars to help pay creditors as part of the bankruptcy process. Liquidators see value in buying these brand names (Fortunoff and Circuit City are rumored to be next on the list), and then slapping them on new merchandise from different manufacturers. They’re trying to leverage the intrinsic value in the brand names in consumers’ minds.
The ethical question is this — is it fair to offer consumers products with a brand name on them that they associate with a certain value and expectation, which might not actually have the same quality, etc.?
Bankruptcy courts claim the process of selling brand names is valid, because creditors should have every opportunity available to them to recoup their money. So far, consumer rights activists aren’t stepping up to oppose the practice of transferring brand names in this way. What do you think?
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