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COVID-19 impact: Bankruptcies big time in US corporate companies

From oil companies and gyms to an apparel retailers with a history that goes back to 1818 have declared bankruptcies since March.

Published: 11th July 2020 09:50 AM  |   Last Updated: 11th July 2020 09:50 AM   |  A+A-

The proposed seven amendments, cleared by the Cabinet earlier this week, aim at improving the effectiveness of the bankruptcy law.

Representational image (Photo | Reuters)

Express News Service

The Covid 19-led shutdowns, near-zero travel demand and people staying indoors in the fear of contracting the deadly virus have meant no business which, in turn, has triggered a wave of bankruptcies in Corporate America, pushing President Trump to reopen the country.

From oil companies and gyms to an apparel retailers with a history that goes back to 1818 have declared bankruptcies since March.

The Covid-19 lockdown has brought most of the retail sector to its knees. All victims of declining prices, surging costs and changing tastes, here are some of the biggest names to file for bankruptcy: 

EXPRESS ILLUSTRATION

Chapter 11

Named after the US bankruptcy code 11, it is filed by corporations and involves a reorganisation of assets and debt, giving the debtor a fresh start 

Other companies that have announced store closures

Bath & Body Works’ parent company, L Brands

The company will close 50 locations in the US, as well as one store in Canada this year

Signet Jewelers
In June, the company revealed that it plans to close 150 US stores and 80 UK stores

Zara
In June, Zara’s parent company, Inditex, announced plans to close between 1,000 and 1,200 stores over the next two years 

Macy’s
It said it will be closing 125 stores over the next three years

Nordstrom
In June, it announced that it will permanently close all three Jeffrey designer apparel stores in addition to the 16 Nordstrom department stores it plans to shut down

April

Diamond Offshore & Whiting Petroleum

Both the oil and gas companies have cited falling demand for its services which had “worsened precipitously” this year amid a price war between OPEC and Russia and a steep drop in oil demand caused by the Covid-19. While Diamond Offshore has significant operations in the Gulf of Mexico, Whiting Petroleum was one of the largest producers in North Dakota’s Bakken shale region. Whiting Petroleum was among the first energy companies to file for bankruptcy since the coronavirus reduced demand for oil, and announced a restructuring plan that would cut $2.3 billion of its $3.6 billion debt

May

  • J.Crew The mass-market clothing company announced that its parent company, Chinos Holdings, had filed for Chapter 11 protection  , As part of its debt restructuring plan, the retailer will hand over control to top creditors, including the hedge fund Anchorage Capital, by converting $1.65 billion of its debt into equity
  • Gold’s Gym 32 gyms were closed in April before the Dallas-based company declared bankruptcy in May, with plans to restructure its debt and close locations. The company is touting the scalable model as a way for investors to take advantage of commercial real estate deals that it expects to result from the Covid-19 economic downturn
  • Neiman Marcus Neiman Marcus, a symbol of luxury, was America’s first department store to declare bankruptcy during the pandemic

$675 mn   Neiman Marcus said it has secured $675 million in financing from its creditors to fund operations through bankruptcy 

  • J.C. Penney Bankrupted J.C. Penney has announced plans to shutter 154 stores of its roughly 850 stores, this summer
  • 70% In May, J.C. Penney entered into a restructuring support agreement with lenders holding approximately 70 per cent of J.C. Penney’s first lien debt to reduce the company’s outstanding indebtedness
  • Hertz Car rental giant Hertz was hit by a “rapid, sudden and dramatic” blow by the coronavirus, the company said in May, leading to the biggest bankruptcy filing of 2020
  • $19bn The company is saddled with about $19 billion in debt and nearly 7,00,000 vehicles that have been largely idled because of the coronavirus
  • Tuesday Morning The discount home goods retailer has filed for Chapter 11 bankruptcy blaming Covid-19 for prolonged store closures that caused an “insurmountable financial hurdle” Tuesday Morning aims to use the bankruptcy process to renegotiate a “significant number” of leases and will have around 450 stores left after the process is complete
  • PQ New York The owner of Le Pain Quotidien agreed to sell its US locations of the bakery-cafe chain to New York-based multiconcept operator Aurify Brands LLC during the pandemic that will reopen 35 of its  locations and close the rest  Belgium-based Le Pain was struggling even before the pandemic, moving recently to spin off both its American and British subsidiaries to avoid liquidation In the US, PQ NY blamed sales decline in recent years on increased competition and a lack of investment in digital platforms among others

June

  • GNC (General Nutrition Centers) The 85-year-old vitamin retailer has filed for bankruptcy, warning it will close up to a quarter of its stores and search for a buyer. In its first-quarter earnings report, released in May, losses accelerated to $200 million — far more than the $15 mn it lost during the same period in 2019
  • 24 Hour Fitness 24 Hour Fitness has filed for bankruptcy and is emerging as a smaller chain as it closed 100 locations in 14 US states $250 mn secured in funding by the company and the restructuring will result in “reinvestment in existing clubs, opening new clubs and introducing new innovative products and services”
  • Chuck E. Cheese Parent company, CEC Entertainment which owns 550 Chuck E. Cheese and Peter Piper Pizza locations reopened 266 venues. But, it also filed for bankruptcy citing the “financial strain” of mass restaurant closures due to the pandemic

July

  • Lucky Brand Founded in 1990, the denim company said it will initially close 13 of its 200 stores after filing for bankruptcy and plans to sell the company to SPARC Group, the owners of Nautica and Aeropostale. Debts of the Los Angeles-based business, which is owned by Leonard Green & Partners LP, include $182 million owed to lenders and $79 million to merchandise vendors, according to a filing in US Bankruptcy Court in Wilmington, Delaware
  • Brooks Brothers The Covid-19 pandemic hasn’t spared one of the US’ oldest and most prestigious retailers, which survived two world wars and the shift to casual dressing. Founded in 1818, Brooks Brothers boasts of having dressed 40 US presidents. It has filed for bankruptcy as it continues to search for a buyer, In early April, it began to evaluate which of its roughly 250 North American stores to close
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