SBM 20 - Hunter Durham - A Bankruptcy Tale - When Acquisitions Go Wrong

A Bankruptcy Tale - When Acquisitions Go Wrong 

What happens when a young, ambitious, entrepreneur takes on too much debt to fuel rapid growth acquisitions? 

This week, we dive into the cautionary tale of Hunter Durham, a 29-year-old who filed for Chapter 11 bankruptcy after acquiring three businesses in less than a year. 

Hunter’s businesses, Furniture USA Distribution and Impact Industry Marketing went under in August 2023 - and show you how close the line between success and failure is.

Fast Facts:

  • Approximately 17,000 businesses filed for bankruptcy in 2023 up almost 20% from 2022 

  • The most common types are Chapter 7 liquidation, Chapter 11 reorganization, and the newer Subchapter 5 for small businesses 

  • Subchapter 5, which was created in 2019 and strengthened in 2020, is a more streamlined and less expensive process designed for small businesses, allowing owners to retain control as a “debtor in possession"

  • Common causes include poor cash flow management, excessive debt, and unexpected disasters or economic downturns

  • Here are the top 3 businesses with the lowest SBA loan default rates: 

  1. Insurance agencies and brokerages - 1.79% default rate 

  2. Funeral homes and funeral services - 2.11% default rate 

  3. Veterinary services - 2.45% default rate



  • Just how many businesses file for bankruptcy in the USA each year? 

  • Well, we’ve no data for 2023 yet - but has summarized the number of bankruptcies from 2018 - 2022 here:


Hunter Durham bought three businesses: 

  • An e-commerce furniture retailer

  • A furniture distribution company

  • And a tuck in competitor in the distribution business

The Story:

Hunter Durham strongly believed in the idea of making an impact with his business. This meant buy a business; get the cash flowing; and then impact communities through investment: building orphanages in Africa, and such. 

In Hunter's case, he used $3.8 million in SBA loans to rapidly acquire an e-commerce business, a furniture delivery company, and a competitor. 

On paper, Hunter's acquisitions made sense - vertical integration, expanding territory, and leveraging his digital marketing expertise. He started by buying a furniture e-commerce business that relied on SEO to acquire customers. 

Hunter knew paid advertising having worked at Facebook and figured he could grow that part of the business but maintaining leadership in SEO is a full-time job in and of itself and very different from paid customer acquisition. 

The eCom business didn’t do any fulfillment and Hunter wanted more control over the product and shipping so he then bought a furniture distribution business and then bolstered that by buying out the assets of a competitor.

Each move was logical but the reality was much messier. 

Merging company cultures proved difficult. A foam shortage, caused by a freak Texas freeze knocked out a major supplier, delaying furniture deliveries by months. And when his biggest corporate client, accounting for 50-60% of revenue, went under with Hunter’s accounts receivable, it dragged Hunter's overleveraged business down too.

In hindsight, the warning signs were there. One of Hunter’s key learnings that all acquirers should absorb is that taking on millions in debt fundamentally changes how the acquired business operates. 

It’s a different business after you acquire it and add the debt. Hunter also admits his impact-driven mindset, focused more on making a difference than the bottom line, may have caused him to grow faster and take more risks than a profit-focused owner would. 

A higher cause can make the risk seem more justified.

Despite it all, Hunter remains philosophical. 

He got to experience an entire business life cycle in a few short years. He kept his house and his family. And he views the $500K of personal losses as tuition in the school of hard knocks - painful but invaluable. 

It's a powerful reminder that in entrepreneurship, the line between success and failure can be razor-thin. If that customer hadn’t filed for bankruptcy neither would Hunter.

With a bit more luck or a few different decisions, Hunter's story could have been a very different one. It’s also important to remember that while bankruptcy is not desirable, it’s not the end of the world. 

This is particularly true for small businesses with less than $2.8m in debt where filing under subchapter 5 gives owners a lot more flexibility. 

That debt limit temporarily increased to $7.5m during the pandemic and will hopefully do so again during the next economic downturn.

An owner of a business that is profitable but can’t keep up with debt payments, can create a 3-5-year repayment plan, discharge unsecured debt and remain in control of the business.

My key takeaways: 

  1. Be wary of taking on too much debt too quickly, especially if you’re new to managing a business

  2. Customer concentration is risky, even if it fuels rapid growth. Diversify your client base

  3. Buying a business doesn’t mean you have the skills to run it. Make an honest assessment of your abilities.

  4. If you’re facing bankruptcy, seek counsel sooner rather than later. It’s a tool, not a death sentence.

  5. Failure is not final. Bankruptcy is the end of one chapter, but it’s also the beginning of a new one

As for Hunter, he's already on to his next venture and looking to make his mark. His life will go on, shaped but not defined by this experience. I have a feeling we haven't heard the last of his story. 

📅 Next Week:

Next week we are going to deep dive into Loren Feldman and his life and journey-building 21 Hats and his exposure in the entrepreneur world.  

Keep growing,



The most recent episode of The Small Business Mentor Podcast is live. My guest this week was Julie Lopez. We discussed a range of topics mainly focusing on her experience in building a trauma-informed clinical practice.

Check it out here: 


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