“Joy” Probably Wasn’t the Word Unsecured Creditors Were Using.

Founded in Milwaukee in 1884, Harnischfeger became an industrial powerhouse. Mining equipment. Paper-making machinery. Thousands of employees. Global customers. A Milwaukee name that had survived depressions, recessions and two World Wars.

In other words: “They’re Harnischfeger. Of course they’re good for it.”

Then came the 1990s.  Big acquisitions. More debt. Trouble in Asia. A massive paper-machine project that went sideways. Weakening markets. 

Then came a Boardroom decision that exemplifies their terrible financial discipline.  Building a beautiful 63,000 Sq Ft “Taj Mahal” World HQ on the shores of Lake Michigan.  Built in 1995, was put on the market for $14 million just prior to them filing bankruptcy.  Sold for $5.8 million just after. How much they spent to build it is in sealed corporate documents….

$14 million to $5.8 million in 5 year. That depreciation probably wasn't in the ribbon-cutting PowerPoint.

June 1999, Harnischfeger filed Chapter 11 with roughly $1.3 BILLION in liabilities.

Creditors got a firsthand lesson in the difference between: “They are a huge company.”  and “They are a good credit risk.”

Some debt ultimately traded around recoveries of roughly 50–60 cents on the dollar, with creditors receiving equity in the reorganized company rather than somebody simply reaching into a checking account and paying the invoices.

The old shareholders? Wiped out.

Harnischfeger eventually emerged from bankruptcy in 2001 as Joy Global.

A big company can have...

A famous name.   Billions in sales.  Thousands of employees. A gorgeous corporate headquarters.  Decades of history.…and still not pay you.

Revenue isn't liquidity.  A nice headquarters isn't collateral.

That is why great Credit Departments don't simply ask:   “Do we think they'll fail?”

They ask:  “If they do, how much of our money are we willing to lose?”  That is an entirely different conversation.

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