The Great Recession, which began in December 2007 and officially ended in September 2009, has been especially hard on U.S. retailers, and its impact likely will be felt for many more years. Retailers sustained record-breaking declines in sales, inventories, and consumer confidence. The housing market crash, layoffs, and higher gasoline prices all hurt consumer spending and have had a disproportionate impact on retail businesses. And competition among retailers in the U.S. for fewer consumer dollars is fierce, with superstores putting local merchants out of business and, in turn, being hurt by internet retailers that are capturing business previously handled by brick and mortar stores.
Trade creditors that supply struggling retailers face tough choices. Typically, trade creditors are aware that a retailer might file for bankruptcy protection, but do not know precisely when that may occur. Yet the filing date is important because, under the U.S. Bankruptcy Code, what trade creditors do both prepetition and post-petition can impact how they might fare in a retailer’s bankruptcy.
Originally Published in the Journal of Corporate Renewal in October, 2014.
Please see full publication below for more information.