Creditors helping businesses going through Chapter 11 bankruptcy

| Oct 27, 2017 | Chapter 11

In today’s economic climate, many retailers are finding it hard to keep their doors open. After all, they are facing stiff competition from online retail transactions. As a result, many retailers are taking advantage of Chapter 11 bankruptcy protection, but more retailers in the United States, including in Massachusetts, are now receiving helping hands from vendors, creditors and landlords to stay in business after bankruptcy.

Before this year, the majority of retailers who went bankrupt ended up not being able to recover during the process. These companies include the likes of The Limited, American Apparel and Sports Authority. Companies and investors acquired these companies’ assets, including their intellectual property, but did not want to keep the businesses going because they did not want to take on expensive store leases. Instead, they usually tried to revamp these brands online.

However, many landlords, creditors and vendors are now seeing the value remaining in some retailers filing for bankruptcy and thus are willing to help preserve them. This could cause the drop in retail jobs to finally slow down. This year alone, the number of brick-and-mortar positions fell by a whopping 100,000-plus due to the closing of over 6,000 stores.

Chapter 11 bankruptcy is ideal for businesses that have too many liabilities and not enough assets, which can happen for a variety of reasons, including poor market conditions. However, navigating the bankruptcy process can be confusing due to the many procedures involved. An attorney in Massachusetts can help to ensure that the right steps are taken during this legal process.

Source: reuters.com, “Bankrupt U.S. retailers begin to catch a break“, Jessica DiNapoli and Tracy Rucinski, Oct. 8, 2017