Post-Bankruptcy Equity Performance: Uncovering Undervalued U.S. Equities with Restructuring Potential

The art of identifying undervalued equities often lies in recognizing companies that have navigated financial distress and emerged with renewed operational clarity. Post-bankruptcy restructuring, when executed strategically, can unlock hidden value by reducing debt burdens, streamlining operations, and realigning business models with market demands. This article examines historical case studies—General Motors (GM), Neiman Marcus, and Chrysler—to dissect patterns in equity recovery and debt management, offering insights for investors seeking opportunities in the aftermath of corporate distress.

General Motors: A Blueprint for Industrial Resilience

General Motors' 2009 Chapter 11 filing marked one of the most dramatic corporate turnarounds in U.S. history. Backed by a $50 billion federal bailout under the Troubled Asset Relief Program (TARP), GM restructured by splitting into "NewCo" (retaining profitable brands) and "OldCo" (liquidating liabilities). By 2025, the company's debt-to-equity ratio had improved from 2.24 in 2015 to 2.00, reflecting a disciplined approach to deleveragingGeneral Motors Company (GM) Financial Ratios - Stock Analysis^[1].

Equity performance further underscores GM's recovery. Its stock price rose from $52.83 in 2024 to $58.73 in 2025, while EBITDA margins hit 13.80% in the trailing twelve months ending September 2024General Motors (GM) Quarterly EBITDA: $5.718B^[2]. This growth was fueled by strategic pivots, including a commitment to electrification and autonomous driving. GM's 2024 EBITDA of $26.44 billion—a 20% increase from 2023—demonstrates how operational efficiency and innovation can drive long-term valueHow did General Motors bounce back after filing…^[3].

Neiman Marcus: The High-Stakes Retail Gambit

Neiman Marcus' 2020 bankruptcy filing revealed the vulnerabilities of legacy retail models in the digital age. At the time, the luxury retailer carried a debt-to-EBITDA ratio of 12.4x, far exceeding the 6x threshold for "highly levered" firmsNeiman Marcus: A Restructuring Case Study - Mercer Capital^[4]. Its restructuring involved converting debt to equity and refinancing $1.1 billion in obligations, reducing annual interest costs by $30 millionMonths out of bankruptcy, Neiman Marcus refinances $1.1B in debt^[5].

Despite these measures, Neiman Marcus struggled to regain pre-bankruptcy profitability. By December 2024, it was acquired by Saks Global for $2.7 billion, though Saks itself faces liquidity challenges, including unpaid vendor billsWhat’s next for Neiman Marcus under Saks Global^[6]. This case highlights the risks of over-leveraged buyouts and the importance of aligning capital structures with evolving consumer behaviors. For investors, Neiman Marcus' story underscores the need to assess not just debt reduction but also a company's ability to adapt to technological and market shifts.

Chrysler's Post-Bailout Evolution: A Cautionary Tale of Synergy

Chrysler's 2009 bankruptcy, supported by $2.9 billion in Canadian government loans and a $50 billion U.S. TARP infusion, enabled its reorganization into Stellantis in 2021. While Chrysler's standalone EBITDA margins post-bankruptcy are not explicitly detailed, Stellantis' 2024 adjusted operating income margin of 5.5–7.0% signals a decline from previous double-digit performanceDodge-maker Stellantis drops profit warning^[7]. The parent company reported a 70% drop in net profit for 2024, attributed to global industry headwinds and competitive pressures'Very rough year': Stellantis profits fall 70% in 2024…^[8].

Chrysler's integration into Stellantis illustrates the complexities of post-bankruptcy synergy. While the merger expanded its market reach, it also diluted Chrysler's brand identity. Investors must weigh such structural trade-offs against long-term strategic goals, such as Stellantis' push into electric vehicles and software-driven mobility.

Patterns for Identifying Undervalued Equities

The cases of GM, Neiman Marcus, and Chrysler reveal three recurring themes for post-bankruptcy success:
1. Debt Reduction and Capital Structure Simplification: GM's debt-to-equity decline and Neiman Marcus' refinancing efforts highlight the importance of reducing leverage to free up cash flow for innovation.
2. Operational Efficiency: GM's EBITDA growth and Stellantis' cost-cutting measures demonstrate how streamlined operations can restore profitability.
3. Strategic Realignment: GM's pivot to electrification and Neiman Marcus' e-commerce investments show the necessity of adapting to market trends.

For undervalued equities, investors should prioritize companies that combine these elements with strong creditor support and clear governance. Metrics like EBITDA margins, debt-to-equity ratios, and stock price momentum provide quantifiable benchmarks for assessing recovery potential.

Conclusion

Post-bankruptcy equities often trade at discounts due to market skepticism, but history shows that disciplined restructuring can unlock substantial value. General Motors' resurgence, Neiman Marcus' partial recovery, and Chrysler's integration into Stellantis offer a roadmap for investors willing to navigate the risks of distressed assets. By focusing on debt reduction, operational agility, and strategic innovation, the next wave of undervalued equities may emerge from today's most challenged industries.