When a company stops earning the estimated amount, after deducing the possible spending for the year, it will be declared as a business which is running in loss. If the same situation continues for the next few years, then it will automatically be declared as a bankrupt company.
Every time a company is declared bankrupt, its creditors, investors, employees, etc., will share the equal level of psychological and physical stress. Since the filing of bankruptcy will follow with multiple processes such as preparing paperwork, fulfilling some requirements, taking care of some financial issues, etc., it will automatically put every person involved with that company into distress.
The company members will not just decide to declare bankruptcy, if there are any other ways that can help them take care of the current problem. However, if there is no other way, then the trustee and creditors will decide to go with chapter 11 bankruptcy rather than any other options, since it will help them to continue their business.
If the business is still running, then chances that the company can get back to its former self with some more effort increases. Even though the company shares and profits will be under the jurisdiction of the