Takeaways from a roundup of retail bankruptcies in 2019

| Feb 12, 2020 | Chapter 11 Bankruptcy |

Mega Chapter 11 bankruptcy can play out in numerous ways, as is evident in CNBC’s report on 2019 retail bankruptcies. 2019 was a big year for Chapter 11 filings, particularly for apparel companies. In total, there were 23 major retail bankruptcies, which is up from 17 in 2018.

Several big-name companies filed Chapter 11 for the second time in 2019, and many of those that filed liquidated entirely as a result. However, some businesses found alternatives to liquidation. In several cases, new buyers emerged to purchase the physical or intellectual property. Other business attempted to close a portion of their stores to mitigate costs.

Here’s a quick overview of some of the companies that filed Chapter 11 in 2019:

  • Shopko initially announced that it would close the majority of its stores to salvage the remaining locations. Its efforts to regroup and revive the chain store were unsuccessful, however. A few months later, it decided to liquidate all assets. Unfortunately, it was unable to find a buyer.
  • Gymboree, which filed for Chapter 11 for a second time in 2019, planned to close all its stores in response. This bankruptcy story took an interesting turn when it found a buyer for the intellectual property rights to two of its brands. The Gap and The Children’s Place will now sell several of the Gymboree brands within their stores.
  • Charlotte Russe filed for bankruptcy in February of 2019 with plans to liquidate. However, the brand and its intellectual property will survive through the sale to fashion house YM, which has said it plans to keep physical stores open under the Charlotte Russe name.
  • Forever 21 filed for Chapter 11 in September with plans to exit European and Asian markets but maintain operating in the United States, Latin America and Mexico. The company reportedly continues to negotiate rent reductions with the landlords of its 800-plus stores worldwide. The bankruptcy comes on the heels of rapid expansion into global markets.

These are just a few examples of a how a scenario can pan out in the complex and nuanced world of Chapter 11 bankruptcy. Every company is unique; therefore, excellent financial guidance and experienced legal representation are essential to helping your company get the best outcome possible from a Chapter 11 filing.