Due to the COVID-19 pandemic, many stores and businesses that were deemed non-essential had to close. The extended closure of these businesses has resulted in many of those businesses losing more than what they earned before and having to file for bankruptcy.
Many of these businesses are brick and mortar businesses and rely on physical customers to keep up with their sales. With stay-at-home orders, quarantines and curfews, these businesses are losing a large chunk of their sales.
Neiman Marcus could be the first major outlet to file for bankruptcy. According to USA Today, the company is up to $5 billion in debt and refrained from making payments due to the 43 retail locations closed in March. To save money, Neiman Marcus had to furlough and temporarily cut pay to about 14,000 employees.
True Religion Jeans have filed for a Chapter 11 bankruptcy for the second time in three years. A Chapter 11 bankruptcy means that True Religion will still have the opportunity to maximize value to shareholders and stay in business after the pandemic has passed.
JCPenny is considering bankruptcy protection and is conferring with financial advisors to explore their options and see what can be done about their missed $12 million debt payment. JCPenny has been dealing with a debt load of $3.7 million since the end of 2019, before the pandemic hit, and now things have gotten worse. According to CNN.com, the company is taking advantage of the 30 day grace period to pay the debt while still meeting with lenders to “maximize financial flexibility.” A consideration for filing for a Chapter 11 bankruptcy is becoming an option as well.
Other businesses such as Capri Holdings (Michael Kors, Versace, Jimmy Choo), Macy’s, Dillards, Kohl’s, Nordstrom, L Brands (Victoria Secret) and many more are considering the same ordeal due to low sales and the closing of many stores in response to the COVID-19 pandemic. There are many ways to file bankruptcy and it may not always mean the same thing for every claim. Businesses are urged to meet with their financial advisors and do what they think is best.