U.S retailers declare bankruptcy at unprecedented pace as demand collapses.
The retail sector is facing the fight of its life as countless stores and restaurants remain closed amid the coronavirus pandemic.
Many brick and mortar retailers that we’re barely holding on prior to the pandemic have been devastated as virtually all of their customers have dried up.
And now an unprecedented wave of bankruptcies is spreading throughout the U.S..
Below are some of the more well known companies that have filed for bankruptcy so far:
JC Penney’s had been struggling for some time, but excessive debt, years of dwindling sales and store closures due to the pandemic were the last straw.
They filed for Chapter 11 Bankruptcy protection on May 15.
JC Penney is permanently closing 242 stores which will leave them with around 600 remaining.
Within weeks they will begin “Going Out of Business” sales at selected stores.
In a last ditch effort to increase their bottom line they’ve asked their landlords to not charge rent for June, July and August as they try to get back on their feet.
And although the retailer is hoping to stay in business, a complete liquidation of the asset is still on the table.
Leading up to the pandemic JC Penney employed close to 100,000 people.
High end department store chain Neiman Marcus finally threw in the towel and
filed for Chapter 11 bankruptcy protection.
They’ve been on the ropes for a while though, as just last year they completed a debt restructuring plan aimed at avoiding bankruptcy.
But with the pandemic forcing retailers to close their doors, it was just too much to take.
The company hopes to eliminate 4 billion in debt during its bankruptcy and be financially stronger when it’s all said and done.
As of now they do not plan on permanent “mass store closings” and stated “If there were to be future store closings it would be an operational decision on a case by case basis.”
Prior to the pandemic the company employed nearly 15,000 people.
J. Crew’s parent company recently filed for Chapter 11 bankruptcy protection as the pandemic disrupted it’s turnaround plans.
The fashion retailer had accumulated unmanageable levels of debt after a private-equity buyout deal in 2011. Having to temporarily close stores due to the coronavirus proved to be the final nail in the coffin.
The company is currently evaluating its leases and will attempt to negotiate rent relief. If unable to reach “certain accommodations with landlords” permanent store closures are inevitable.
Prior to the pandemic the retailer employed close to 13,000 people.
Hertz, one of the largest rental car companies in the nation, recently filed for Chapter 11 bankruptcy protection after 100 years in business.
And although the pandemic pushed Hertz over the edge, they had been in trouble for sometime.
They lost money the last 4 years and are drowning in nearly 19 billion in debt. Additionally, they have some 700,000 cars sitting idly as world wide travel has been decimated.
Hertz has already laid off 12,000 people and furloughed another 4,000.
Pier 1 filed for Chapter 11 bankruptcy protection in January with the hopes to close some 450 stores, eliminate debt and find a buyer. But those hopes were dashed as the coronavirus devastated the already struggling retail sector forcing Pier 1 to pivot and close for good.
The retailer commenced its “Going Out of Business” sale last week.
All in all, 541 stores will be permanently closed and some 17,000 jobs will be lost.
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US Economic News