2020 was a hard year for many retail establishments, with more than 12 filing for bankruptcy this year — an 11 year high. Strained liquidity and plummeting sales made it difficult for some popular chains to stay open, especially if they were already experiencing financial difficulties.
Notable 2020 bankruptcies
Some household names that filed for bankruptcy in 2020 include Neiman Marcus, J.C. Penney, Guitar Center, GNC, Brooks Brothers, Stein Mart, Pier 1 imports and more.
Approximately 60% of retailers that closed their doors in 2020 and filed for bankruptcy had over $100 million in assets. In comparison, in 2019 only 50% of those filing for bankruptcy had over $100 million in assets. In 2018, this number sat at 36%. These bankruptcies are due, in part, to competition with businesses with a strong online presence that sell a wide variety of products.
Will there be more retailer bankruptcies in 2021?
The holiday season is a time for retailers to try to stay in the black. What we can look back on in 2020 is what these mistakes these bankrupt retailers made and what the “new normal” means for retailers moving forward into 2021. Shifting business models can help companies stay in business.
Chapter 11 can be a viable option for struggling businesses
Chapter 11 bankruptcy is one option for businesses that are struggling to make the best of a bad situation. While some companies that file for Chapter 11 bankruptcy will close their doors, the bankruptcy process can be a way for them to recoup some of their financial resources. Other times it can be a way for companies to restructure themselves and stay in business. This post does not offer legal advice, so those in New Jersey that are considering Chapter 11 bankruptcy will want to work with an attorney moving forward.