Retail Chapter 11 Filings Up, Bucking Bankruptcy Trends In Economic Recovery

Greenberg Glusker LLP
Contact

The economy is humming along and bankruptcy filings are at historic lows.  http://www.prweb.com/releases/2015/01/prweb12432257.htm.   Nevertheless, a recent trend in retail may suggest that the times, they are a changing.

Radio Shack, the 95 year old national chain that for many years was the “go to” store for consumer electronics, has been in the headlines as a result of its bankruptcy filing in February.   But getting much less national mainstream publicity was the demise of at least seven clothing retailers, all of whom went out of business or filed Chapter 11 within the past 5 months.   In December it was Deb Shops and Delia’s.   In January, it was Body Central and Wet Seal.  In February, Cache filed, and in April, it was Fresh Produce, Simply Fashion and Frederick’s of Hollywood.

In total, these retailers operated out of over 6,500 stores.   That means many employees are now out of a job.   It also means that there were over 6,500 leases that either were forfeited back to the landlords or sold.  That is a significant disruption for property owners in such a short time period.   And a lot of new business for companies such as liquidators Hilco, Gordon Brothers, and others who specialize in liquidation sales for retail companies that are going out of business, not to mention the bankruptcy lawyers involved in those Chapter 11 cases.

As the economy turns more and more towards e-commerce, it seems reasonable to assume that there will continue to be retail turmoil until a new equilibrium has been reached.  There will always be stores and malls; but more and more consumer spending will be through apps, websites, and other electronic ways of doing business that have not even been invented yet.  So while the total filings are still down, there is reason to think it won’t last much longer. Stay tuned here for future discussion about trends in the economy and how they may affect your business.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Greenberg Glusker LLP | Attorney Advertising

Written by:

Greenberg Glusker LLP
Contact
more
less

Greenberg Glusker LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.