Odd Lots This Is What Happens When a Startup Dies
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Aug 20, 2025 David Johnson, managing principal at Resolution Financial Advisors, specializes in assisting companies with insolvency. He explains the often-overlooked process of winding down a startup and maximizing asset value through fire sales. Johnson shares humorous tales, including a bizarre case where he had to find buyers for human skulls from a startup’s inventory. The conversation also dives into the complexities of navigating bankruptcies, highlighting the urgency in monetizing distressed assets and the unique challenges that arise during liquidation.
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Bankruptcy Tools Vary By Tradeoffs
- Chapter 11 gives a pause from creditors and court-supervised sale rights but is costly and slow.
- Chapter 7 liquidations rarely recover value and trustees often lack niche asset expertise.
Consider Cost Before Filing Bankruptcy
- Avoid Chapter 11 when you lack funds because legal retainers can be $100k–$200k up front.
- Use less costly insolvency alternatives when the likely outcome is a simple wind-down.
Venture Funding Expects Many Failures
- Venture investors accept many failures because a few winners must offset losses.
- Funds intentionally cast a wide net, expecting most investments to break even or fail.
