Is your favorite store filing bankruptcy?

Credit Suisse predicts another wave of retail store business bankruptcy filings this year.  In 2017, fifty separate retail giants filed bankruptcy due in large part to the emergence of Amazon and other online retailers.  Many investors anticipate 2018 will be even worse for typical brick-and-mortar retailers.

2017 Retail Store Filings

The following retail stores filed business bankruptcy in 2017:

• The Limited
• Wet Seal
• BCBG
• Vanity
• HH Gregg
• Radio Shack
• Gander Mountain
• Gymboree
• Payless Shoe Source
• True Religion
• Toys’R’Us

Projected 2018 Bankruptcy Filings

The following retail stores are projected to file business bankruptcy in 2018:

• Sears
• Razer
• BeBe
• Stein Mart
• Burlington Stores
• Destination Maternity Corp. (parent company of A Pea in the Pod, Motherhood Maternity, and Destination Maternity)

What does that mean to you?

Depending on the type of bankruptcy that these companies file, you may or may not get to continue shopping at your favorite retailers.

Chapter 11 Bankruptcy

If the retailer files Chapter 11 Bankruptcy, you will likely get to continue your regular shopping habits.  Corporations file Chapter 11 Bankruptcy to restructure their debt so that they may continue operations.  The retailer typically files a “plan” that proposes how much will be paid to which creditors and when.  If that plan is approved by the court, then the retailer has a chance to stay in business as long as it abides by the provisions of the plan.  If it doesn’t comply, then it will likely end up in Chapter 7 Bankruptcy.

Chapter 7 Bankruptcy

Corporations file Chapter 7 Bankruptcy to terminate the business.  Corporate Chapter 7 Bankruptcy ensures the orderly liquidation of business assets so as to maximize payments to the business creditors.  Corporations may also end up in Chapter 7 Bankruptcy if the corporation previously filed a Chapter 11 Bankruptcy but that bankruptcy failed.  If your retailer files Chapter 7 Bankruptcy, don’t count on shopping at that store any more.

A Sign of the Times

It should come as no surprise that brick-and-mortar retail businesses are going belly-up.  Online retailers will only grow more and more dominant.  Without the need to purchase and maintain a massive network of physical business locations, online retailers can remain agile and quick to respond to market forces.  A perfect example is Amazon’s foray into the grocery business.  Since grocery stores are technically “retail stores”, they remain one of the only sound business models in that industry.  Amazon recognized this and purchased Whole Foods last year as a way to get into the grocery business.

Business Bankruptcy

If you own a retail business that is suffering as a result of this new online economy, contact us today.  We may be able to help you deal with your debt and, hopefully, keep you out of bankruptcy.