Coronavirus Claims More Victims in Corporate America. Store Closures and Bankruptcy Filings Pile Up.
An increasing number of companies are approaching the American bankruptcy courts unable to face the rampaging onslaught of the COVID-19 pandemic that has disrupted the markets in a desperate attempt to stave off creditors. The last few weeks have seen iconic names like J.C. Penney, Hertz, Neiman Marcus, Tuesday Morning, J. Crew, and Advantage Rent A Car filing for Chapter 11 bankruptcy even as they faltered facing mounting debts and a bottom line undermined by years of poor performance.
Desperate Measures to Prevent Outright Liquidation
When seen from a macro perspective, these cases are prime examples of how some of the country’s frailest companies. According to https://edition.cnn.com, a Chapter 11 bankruptcy filing does not mean that the company will cease operations. To remove debt from their books that they cannot service and restructure their operations in the hope they can bounce back stronger. In each of the bankruptcy filings so far due to the impact of the pandemic, the company has said that they wanted to use the bankruptcy code to ensure that the business can be sustained in the long run.
The Pandemic Accelerated the Collapse of Many Companies
In some cases, like Le Pain Quotidien, the Belgian chain of restaurants. The company was already in major financial trouble due to stiffer competition. From more agile competitors as well as the absence of online ordering. According to Matthew Katz, managing partner of the consultancy firm SSA & Co., retailers with a massive debt position. A shaky brand position, and lacking in digital marketing expertise were already prime candidates. For Chapter 11 bankruptcy and the pandemic just accelerated the process. However, the travel sector companies, the pandemic was something that they simply could not have anticipated. However, it is true that even in an industry that was generally seen to be booming. Some operators were already on shaky ground. The process of declaring bankruptcy is familiar. Since 2008, this is the third time it has taken refuge from its creditors in this manner.
Retailer Plans Go Awry
In February when the threat of the virus was not so imminent, Pier 1 Imports filed for Chapter 11 bankruptcy. With plans to close around 450 stores to keep several hundred others alive. However, with COVID-19 taking its toll, the retailer has now announced that it will close all its outlets. Tuesday Morning that is trying to survive by using bankruptcy to shutter around 230 of its nearly 700 stores. Even as it managed to reopen around 80% of the temporarily closed stores, the company. Has now announced that the pandemic has created a financial obstacle that could not be managed. The store closings are having a big impact on the real estate market. And putting tens of thousands of jobs at stake.