Why Businesses go Bankrupt: RedEnvelope
Internet gift merchant RedEnvelope suffered a net loss of $4.3 million in the last quarter of 2007, citing “smaller average orders, lower profit margins and a 20 percent reduction in orders shipped.”  After losing its line of credit with Wells Fargo in April 2008, the company said it had “insufficient funds to continue operations” and filed for chapter 11 in April, 2008.
Lesson learned: Try to arrange multiple lines of credit to increase the chances of getting through an economic downturn.
