Tag Archives: bankruptcy

NYC Hammered By 40% Bankruptcy Surge

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While Wall Street panic buys stocks again, on hopes Washington can pass the next round of much-needed economic stimulus, the broader commercial real estate market continues to implode and nowhere more so than the epicenter in New York City, where nearly 6,000 business closures, has resulted in a 40% eruption in bankruptcy filings across business districts of all five boroughs this year, reported Bloomberg.

Al Togut, a bankruptcy lawyer who has handled insolvencies for small firms to mega-corporations, said, “by late fall, there will be an avalanche of bankruptcies … When the cold weather comes, that’s when we’ll start to see a surge in bankruptcies in New York City.”

The coming wave of business closings, as explained in “Old Man Winter To Plunge Restaurants Into Further Chaos,” is set to crush eateries and other small businesses in NYC ahead of the holiday season.

“It’s a crisis, and we need to act—our economy can’t recover without saving small businesses,” said NYC Comptroller Scott Stringer, a candidate in next year’s mayoral election.

“When they close, we don’t just lose our beloved Main Street businesses. We lose jobs, tax revenue and the economic backbone of our city,” Stringer said.

Zero Hedge

Bankruptcies Rise Despite Trillions in New Liquidity

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Misguided lockdowns have destroyed the global economy and the impact is likely to last for years.

The fallacy of the “lives or the economy” argument is evident now that we see that countries like Taiwan, South Korea, Austria, Sweden, and Holland have been able to preserve the business fabric and the economy while doing a much better job managing the pandemic than countries with severe lockdowns.

One of the most alarming facts about this crisis is the pace at which bankruptcies are rising. Despite an $11 trillion liquidity injection and government aid in 2020, stocks and bonds at all-time highs, and sovereign as well as corporate yields at all-time lows, companies are going bust at the fastest pace since the Great Depression. Why? Because a solvency crisis cannot be disguised by liquidity.

Trillions in liquidity are giving investors and governments a false sense of security, because yields are low and valuations are high, but it is a mirage driven by central bank purchases that cannot disguise how quickly companies are entering into long-term solvency issues. This is important because soaring bankruptcies and the rise in zombie companies means less employment, less investment, and lower growth in the future.

Mises.org

7 Out of 10 Nursing Homes “Can’t Go On”

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The COVID-19 pandemic is plunging U.S. nursing homes into a major financial crisis and many of them could go out of business, says a survey released by the industry’s trade association, the American Health Care Association/National Center for Assisted Living, or AHCA/NCAL.

In a poll of nearly 500 nursing home operators, 72%, said they couldn’t keep going for another year under current conditions while 55%, said they were running at a loss. As politicians on Capitol Hill grapple with another rescue package, nearly all nursing home operators—92%—say they’ve received financial aid during the crisis, and 58% say they’ll face “significant” financial problems when it ends.

University of Alabama Health Administration professor Robert Weech-Maldonado, an expert in the field of nursing home economics, says the findings of the survey are credible and even unsurprising. The pandemic has forced homes to spend a lot more money, especially on extra staff and personal protective equipment.

Heat St

Nursing Home Prison Conditions Now Extended Under Covid Lockdowns

Brooks Brothers Files For Bankruptcy

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Even if workers could head to the office right now, chances are they wouldn’t be wearing a Brooks Brothers suit.

The 200-plus-year-old retailer best known for what would now be considered formal office attire has filed for bankruptcy, falling victim to the COVID-19 outbreak, which has shuttered stores and stymied retail, and changing styles.

Brooks Brothers had fallen on rough times even before the pandemic, announcing last year that it would explore its strategic options.

It now has a $75 million debtor-in-possession loan and there is interest from a potential buyer, Barneys New York owner Authentic Brands LLC, according to The Wall Street Journal.

Market Watch

Major Retailers That Have Filed For Bankruptcy Since COVID

Major Retailers That Have Filed For Bankruptcy Since COVID

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From iconic department stores to entertainment giants, the coronavirus has seemingly spared no one in its devastation of the U.S. economy.

Falling consumer demand, reduced entertainment spending, and stay-at-home orders mandating certain businesses stay closed continue to take their toll on a retail industry that has been struggling for the past several years as consumers pivot to online shopping.

Even with the slow reopening of the economy as lockdowns beginning to lift, social distancing measures may continue for months. That will impact store capacity for retail and restaurants. For some businesses, these temporary changes could indicate bigger problems.

NBC News

J Crew Declares Bankruptcy

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Fashion retailer J. Crew’s parent company filed for Chapter 11 bankruptcy protection Monday after the coronavirus pandemic undermined its turnaround plans.

J. Crew was on weak footing before the pandemic began, having racked up an unsustainable amount of debt from a private-equity buyout deal in 2011. COVID-19 plunged the company deeper into crisis mode as it temporarily closed its stores.

As of Monday, the company had 181 J. Crew retail stores, 140 Madewell locations and 170 factory stores in addition to its websites. The retailer had about 13,000 employees before the pandemic began.

USA Today

David’s Bridal Files For Bankruptcy

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David’s Bridal is filing for bankruptcy protection but there is no danger for customers who have ordered dresses because operations continuing as normal while the wedding and prom retailer restructures.

The bankruptcy filing, the private company said Monday, will wipe out more than $400 million in long-term debt.

It has commitments for $60 million in new debtor-in-possession financing and expects to exit Chapter 11 in early January.

The 300-plus stores run by the Conshokocken, Pennsylvania, company will continue to operate and online sales will continue unimpeded.

the Hour

SEARS Files For Bankruptcy

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Sears Holdings shares traded down more than 23% Monday, hitting a record low of $0.28 apiece, after the company filed for Chapter 11 bankruptcy early Monday morning.

The iconic American retailer, which has seen sales cut in half since 2014, announced it would close 142 stores before the end of year and that CEO Eddie Lampert will step down. Lampert will remain the company’s chairman.

“Over the last several years, we have worked hard to transform our business and unlock the value of our assets,” Lampert said in a statement on Monday.

“While we have made progress, the plan has yet to deliver the results we have desired, and addressing the company’s immediate liquidity needs has impacted our efforts to become a profitable and more competitive retailer.”

Business Insider

Toys ‘R’ Us Paid Executives $16M in Bonuses, 30,000 Workers Get Nothing

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Toys R Us isn’t paying severance to its 30,000 workers who will lose their jobs as the retailer shuts down, even though it doled out millions in executive bonuses a week before it filed for bankruptcy. Now, some workers are calling on lawmakers to create new rules that would require bankrupt companies backed by private-equity firms to provide compensation to their workers.

On Friday, more than a dozen workers met with lawmakers in New Jersey, where Toys R Us is based, to push for severance pay. Workers also called for new regulations on leveraged buyouts, as well as windfall taxes that would prevent private-equity firms from running a business into the ground and then walking away with huge sums of money.

In addition to meeting with lawmakers, employees are preparing to file a claim in bankruptcy court next week asking that they be fairly compensated, according to workers’ advocates at the Center for Popular Democracy.

Bezos Post

CNN Money

Yahoo

NY Post

Cambridge Analytica Files For Bankruptcy

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The embattled political consulting firm Cambridge Analytica announced on Wednesday that it would cease most operations and file for bankruptcy amid growing legal and political scrutiny of its business practices and work for Donald J. Trump’s presidential campaign.

The decision was made less than two months after Cambridge Analytica and Facebook became embroiled in a data-harvesting scandal that compromised the personal information of up to 87 million people. Revelations about the misuse of data, published in March by The New York Times and The Observer of London, plunged Facebook into crisis and prompted regulators and lawmakers to open investigations into Cambridge Analytica.

In a statement posted to its website, Cambridge Analytica said the controversy had driven away virtually all of the company’s customers, forcing it to file for bankruptcy in both the United States and Britain. The elections division of Cambridge’s British affiliate, SCL Group, will also shut down, the company said.

New York Times