More Than 2% of Businesses Have Filed for Bankruptcy Due to COVID-19
Last year was tough on retailers, and pre-COVID 2020 wasn’t looking much better. The pandemic predictably made things worse, with a variety of retailers filing for bankruptcy since March. In April, a study out from researchers at the University of Illinois, Harvard Business School, Harvard University and the University of Chicago revealed that 2% of businesses are gone forever — and the numbers have only gone up since then.
Below are just a few examples of companies forced to close even as the country continues to work on reopening. Gyms have been hard-hit by closures and the difficulty of safely reopening. As a result, Town Sports International filed for Chapter 11 bankruptcy in mid-September. Many of its 200 locations haven’t been able to reopen since the initial lockdowns in March.
Century 21 will close all 13 of its stores after filing for bankruptcy in early September. It has blamed insurance companies for failing to cover COVID-19 losses. Unfortunately, pandemics aren’t covered in most commercial policies. Incredible acrobatic shows aren’t immune to failure either. With Las Vegas closing down due to the pandemic this year, Cirque du Soleil filed for bankruptcy in June. The company also had to lay off 3,500 people. Without the revenue from audience attendance, there wasn’t much choice.
This is just the tip of the iceberg when it comes to closures. Companies from industries as diverse as airlines to nutrition shops have struggled due to changing shopping habits and COVID-19 closures. The year 2020 has been a significant test of what companies are prepared for major adversity and which ones were already struggling. For many, COVID-19 was the final straw — who will be next?
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