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By Pablo Bonjour
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I have spent two decades inside distressed companies, and I have learned that the most dangerous moment is rarely the one where the money runs out. It is the one before that, when the people running the business are still fighting, still believing, still certain that the next call, the next deal, the next quarter will turn it around.
That certainty is not a character flaw. It is the same instinct that built the company in the first place. Entrepreneurs are rewarded for optimism, for persistence, for refusing to accept that a problem cannot be solved.
Those traits are real assets. They become liabilities when the facts change and the leader does not.
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The numbers show that more leaders are facing that moment now. Total U.S. bankruptcy filings rose 14 percent in the first quarter of 2026 compared with a year earlier, and commercial Chapter 11 filings increased 37 percent, according to Epiq AACER data published by the American Bankruptcy Institute. Subchapter V elections, the path designed for small businesses, rose 67 percent. Distress is not theoretical. It is arriving in more boardrooms, more quickly.
Resilience vs. Denial
What I see in those rooms is rarely a leader who has given up. It is a leader who is working harder than ever, applying the playbook that worked before, and missing the fact that the playbook no longer fits the situation. I have sat with CEOs who tried 50 different solutions rather than do nothing. Their energy was admirable. Their diagnosis was wrong.
The hardest thing for a successful leader to accept is that past success can make the present harder to read. A founder who survived a downturn in 2008, a lost customer, a financing crunch, learns that persistence works. That lesson is true until it is not. The danger is that the lesson becomes an identity, and the identity becomes a refusal to see what the numbers are saying.
I have watched this play out in real time. A board decided at the last minute that it did not like the purchaser in a sale that would have returned $80-90 million.
They overruled the restructuring team and chose a different path. The company ended up in bankruptcy, the best offer was a fraction of the original, and the directors exposed themselves to a lawsuit that might otherwise have been avoided.
Warning Signs
The alternative is not pessimism. It is discipline. A leader who can separate their emotional investment from the company's actual position is not giving up. They are doing the job. That means asking a question that successful people rarely ask: what would have to be true for this plan to fail, and what would I do if it did?
In practice, that question has to become a rule. Not a feeling, not a hope, not a belief that another solution is around the corner. A trigger. A cash threshold. A covenant breach. A missed forecast. A financing deadline that passes without a deal. Something objective that forces a reassessment regardless of how confident the leader feels.
The point is not to predict the future. It is to make sure that the decision to change course is made by the facts, not by the person who is most invested in the current one.
Hope is not a plan. I have said that to more CEOs than I can count, and some of them have heard it as an insult. It is not meant as one. It is meant as a warning. Hope keeps a team together. It keeps morale up. It is not a substitute for a cash flow forecast, and it cannot tell you how many weeks of runway you have left.
Stronger Leadership
The leaders who come through distress best are not the ones who fought hardest. They are the ones who recognized earliest that the fight had changed shape. They kept their optimism. They kept their commitment. They let go of the belief that the next quarter would look like the last one, and they acted on what was actually in front of them.
That is not a smaller kind of leadership. It is a harder one.
Boards should establish clear intervention triggers before a crisis develops, with predefined thresholds for cash flow, runway, revenue, and other critical indicators that prompt action before options narrow. Waiting until distress is undeniable can leave leaders with fewer choices and less time to use them.
Pablo Bonjour is founder and CEO of Veritas Restructuring Group, which provides paid restructuring and bankruptcy-advisory services. All opinions are the author’s own.
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