Chapter 11 bankruptcy may help retailers

| Apr 14, 2017 | Chapter 11

Many retailers have been struggling in the modern economy and thus have been filing for bankruptcy. More of these bankruptcies, including Chapter 11 bankruptcy filings, are expected as well in the future in Massachusetts and elsewhere. According to one analyst, about 9,000 shops are expected to close down this year, a much larger number than during the Great Recession’s worst year.

The number of retailers in the United States with debt that is considered to be in the junk category has tripled during the past six years. A total of $5 billion is slated for repayment by such companies up to 2021. However, some of these payments are expected not to be made.

Problems that retailers in particular may have include having too many stores. In other cases, retail companies have their shops in bad locations due to the shifting of traffic patterns. Meanwhile, other companies struggle simply because they have built their stores too large. Although a healthy retailer can tweak its store portfolio from time to time, a strapped one is financially unable to do this.

Bankruptcy is designed to help companies gain a little breathing room in their finances, not to destroy them. In fact, through bankruptcy, struggling companies can find themselves able to reorganize their operations and finances to stay in business. For manufacturers, businesses and real estate partnerships, going through bankruptcy court may actually lead to multiple years of profit in the future. An attorney in Massachusetts can walk company owners through the Chapter 11 bankruptcy process so that they can experience much-needed financial freedom.

Source: startribune.com, “Schafer: Odds are long for retailers that file Chapter 11 bankruptcy“, Lee Schafer, April 9, 2017