Major Companies Going Bankrupt in 2020
It’s no secret that many retailers, restaurants and other major brands have been struggling for years. The precipitous downturn in the economy thanks to the coronavirus has pushed plenty of companies that were teetering on the brink of bankruptcy right over the edge.
Filing for bankruptcy doesn’t always mean the kiss of death — chapter 11 bankruptcy is a reorganization of debts designed to keep businesses alive, while Chapter 7 bankruptcy means a company liquidates all of its assets and goes out of business permanently.
Here’s a look at the major companies that have filed for bankruptcy this year.
Last updated: Oct. 12, 2020
24 Hour Fitness
Number of locations closing: 100
National gym chain 24 Hour Fitness filed for bankruptcy on June 15 following closures due to the coronavirus pandemic, CNN reported.
“If it were not for COVID-19 and its devastating effects, we would not be filing for Chapter 11,” CEO Tony Ueber said in a statement obtained by CNN. “We expect to have substantial financing with a path to restructuring our balance sheet and operations to ensure a resilient future.”
24 Hour Fitness permanently closed 100 of its U.S. locations, leaving about 300 clubs remaining.
Advantage Rent A Car
Number of locations closing: 21
Advantage Rent A Car filed for bankruptcy in May amid a major downtown in travel caused by the coronavirus pandemic. The company said it would be closing 40% of its U.S. locations, Reuters reported.
“We have been hit with a simultaneous drop in leisure travel, with greatly increased costs, and frozen credit markets,” Advantage spokesman Jon Austin said in a statement obtained by Reuters.
Advantage previously filed for bankruptcy in 2008 and 2013, USA Today reported.
Chuck E. Cheese
Number of locations closing: 34
CEC Entertainment, the parent company of Chuck E. Cheese and Peter Piper Pizza, filed for Chapter 11 bankruptcy protection on June 24 as a result of pandemic-related closures and existing debt, USA Today reported. In its bankruptcy filing, CEC listed $2 billion in debt and $1.7 billion in liabilities. CEO David McKillips said in a statement that the coronavirus pandemic is “the most challenging event in our company’s history.”
McKillips was hopeful the filing would be able to keep the company afloat, stating that he wants to “get back to the business of delivering memories, entertainment and pizzas for another 40 years and beyond.”
The company is planning to permanently close about 34 of its 555 company-owned locations.
Dean & DeLuca
Number of locations closing: 0
New York grocery chain Dean & DeLuca had already closed all of its nonfranchise locations by the time it filed for Chapter 11 bankruptcy in March, Bloomberg reported. The company had just one employee and $500 million in liabilities at the time of its filing. With its filing, Dean & DeLuca hoped to reach a restructuring deal that would allow it to reopen its locations.
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Fairway
Number of locations closing: 0
Dean & DeLuca isn’t the only New York-based grocery chain to file for bankruptcy in 2020. On January 23, Fairway filed for bankruptcy and announced plans to sell its remaining 14 locations, CNN reported. Increased local competition from Whole Foods and Trader Joe’s as well as competition from online grocers like Amazon and Fresh Direct made it difficult for Fairway to stay afloat. CEO Abel Porter said in a statement that he hoped that selling its locations would lead to “long term success under new ownership.”
GNC
Number of locations closing: Up to 1,200
Vitamin and dietary supplement store GNC had already accumulated nearly $1 billion in debt before the pandemic hit, but stay-at-home orders disrupted its refinancing plans, CNN reported. Now the retailer might close up to a quarter of its stores as it awaits a buyer.
“The Chapter 11 process will allow us to […] invest in the appropriate areas to evolve in the future, while improving our capital structure and balance sheet,” GNC said in a letter to shoppers obtained by CNN.
Gold's Gym
Number of locations closing: 30
Like 24 Hour Fitness, Gold’s Gym struggled to recover from the coronavirus-related gym closures. On May 4, the fitness chain announced in a company blog post that it had filed for Chapter 11 bankruptcy “in an effort to facilitate the financial restructuring of the company. This pre-negotiated filing will enable us to emerge stronger and ready to grow, and it is our intent to be on the other side of Chapter 11 by August 1, if not sooner.”
“The global COVID-19 pandemic spurred us to take immediate action, including the difficult but necessary decision to permanently close about 30 company-owned gyms, to maintain the strength and growth of the potential of the brand as well as ensure the continued viability of the company for decades to come,” the statement continued. “We have been working with our landlords to ensure that the remaining company-owned gyms reopen stronger than ever coming out of this pandemic.”
Hertz
Number of locations closing: N/A
Hertz Global Holdings Inc. — which owns the Dollar and Thrifty rental car brands in addition to Hertz — had racked up more than $24 billion in debt by March, and by mid-March, the company lost all revenue as travel shut down due to the coronavirus, USA Today reported. Unable to pay back its creditors, Hertz filed for bankruptcy on May 22. After filing for bankruptcy, the company put thousands of its rental cars up for sale.
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JC Penney
Number of locations closing: 242
JC Penney was already incurring debt due to declining sales and unsuccessful strategy pivots before the coronavirus pandemic hit, and the resulting store closures made it impossible for the retailer to keep up with payments owed to its creditors, USA Today reported. At the time of its filing, JC Penney had racked up $4.2 billion in debt. The department store said it planned to close approximately 29% of its 845 locations.
J. Crew
Number of locations closing: 0
On May 4, J. Crew Group — which operates the J. Crew and Madewell brands — became the first national American retailer to file for bankruptcy protection following the coronavirus pandemic-related store closures, CNN reported. Despite the filing, J. Crew said it planned to reopen all of its J. Crew, Madewell and factory stores once shutdown orders were lifted, Forbes reported.
John Varvatos
Number of locations closing: N/A
Luxury menswear brand John Varvatos announced on May 6 that it had voluntarily petitioned for Chapter 11 bankruptcy to facilitate its sale to one of its existing investors, Lion Capital.
“Along with the rest of the luxury retail industry, John Varvatos Enterprises has been greatly impacted by the negative effects of the coronavirus pandemic,” the company said in a news release. “In response to the rapid and exponential spread of COVID-19 as well as relevant governmental orders, the company’s leadership took difficult yet prudent steps to temporarily close all store locations and conserve cash. The restructuring and related agreements represent the effort to continue the company’s legacy and to reposition the reorganized entity for long-term success.”
Although the company has temporarily closed all 30 of its stores due to the coronavirus outbreak, it has not announced plans to permanently close any locations.
Le Pain Quotidien
Number of locations closing: 63
Le Pain Quotidien filed for Chapter 11 bankruptcy in late May, citing the fallout from pandemic-related closures, CBS News reported. Under the restructuring plan, Le Pain would sell its 98 U.S. locations to Aurify Brands — which owns other restaurant franchises including Five Guys Burgers — with 35 stores expected to remain open.
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Lucky Brand
Number of locations closing: 13
On July 3, Lucky Brand announced that it was filing for Chapter 11 bankruptcy as part of its plan to sell all of its assets to SPARC Group LLC, which owns a number of retail brands including Aéropostale and Nautica.
“The COVID-19 pandemic has severely impacted sales across all channels,” Matthew A. Kaness, interim CEO and executive chairman of Lucky Brand said in a news release. “While we are optimistic about the reopening of stores and our customers’ return, the business has yet to recover fully. We have made many difficult decisions to preserve the Company’s viability during these unprecedented times. After considering all options, the Board has determined that a Chapter 11 filing is the best course of action to optimize the operations and secure the brand’s long-term success.”
As part of the bankruptcy process, Lucky Brand would be closing 13 of its 200 North American stores, Business Insider reported.
Modell's Sporting Goods
Number of locations closing: 153
Family-owned chain Modell’s Sporting Goods filed for bankruptcy on March 11 and announced that it would be closing all of its 153 stores across the northeast, CNN reported. The bankruptcy filing came just before the coronavirus-related retail closures. Instead, increasing competition and a move to online sales were the reason for Modell’s financial issues, with CEO Mitchell Modell stating that an “extremely challenging environment for retailers” was behind the decision to liquidate.
“This is certainly not the outcome I wanted, and it is one of the most difficult days of my life,” he said in a statement obtained by CNN.
Neiman Marcus
Number of locations closing: 0
Neiman Marcus filed for bankruptcy on May 7, CNN reported. The 113-year-old retailer had long been in financial trouble, and the situation became worse when it was bought by a private equity company in 2013. Saturation in the luxury department store space and an inability to attract new customers only added to issues, with Neiman Marcus’ debt reaching $5 billion by 2019. Although the retailer had been on the upswing, the coronavirus pandemic caused sales to plummet once again.
Papyrus
Number of locations closing: 254
Papyrus announced that it would be closing all of its retail locations after its parent company, Schurman Fine Papers, filed for bankruptcy in January, the New York Post reported. The stationary and greeting card company cited the general downturn in the retail industry as well as increasing costs as the reason for its bankruptcy.
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Pier 1 Imports
Number of locations closing: 541
Pier 1 Imports filed for bankruptcy in February and was hopeful at the time that it would be able to find a buyer that would be able to keep it in business, USA Today reported. Unfortunately, the coronavirus pandemic derailed those plans, and in May, the company announced that it would be closing all 541 of its retail locations.
“This decision follows months of working to identify a buyer who would continue to operate our business going forward,” Robert Riesbeck, Pier 1’s CEO and CFO said in a news release. “Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of COVID-19, hindering our ability to secure such a buyer and requiring us to wind down.”
Roots
Number of locations closing: 7
Canadian clothing retailer Roots announced in April that it was closing seven of its nine U.S. stores as its American subsidiary, Roots USA Corp., filed for Chapter 7 bankruptcy, The Canadian Press reported. The stores had already been losing money and the pandemic only made the situation more precarious, Meghan Roach, interim chief executive officer, said during a conference call.
Sur La Table
Number of locations closing: 51
Sur La Table announced on July 8 that it was filing for Chapter 11 bankruptcy to complete the sale of several of its retail locations to Fortress Investment Group.
“This sale process will result in a revitalized Sur La Table, positioned to thrive in a post COVID-19 retail environment,” Jason Goldberger, CEO of Sur La Table, said in a news release. “Sur La Table will have a balance sheet and retail footprint optimized to position the Company for a bright future that continues our nearly 50-year tradition of offering high-quality cooking products and experiences to our customers.”
As part of its restructuring, the luxury kitchen goods retailer planned to close 51 of its 121 stores, USA Today reported.
True Religion
Number of locations closing: 8
True Religion filed for Chapter 11 protection on April 13 after accumulating approximately $138.5 million in secured debt and another $44 million in debt owed to unsecured creditors, the Los Angeles Business Journal reported. In June, the company announced a restructuring plan that included closing eight store locations, though the plan was ultimately rejected.
True Religion’s 2020 filing was its second bankruptcy filing in three years. In its recent filing, the company said the coronavirus pandemic and the resulting store closures had negatively affected its business, Forbes reported.
Tuesday Morning
Number of locations closing: 230
Tuesday Morning filed for Chapter 11 bankruptcy protection in late May with plans to close more than a third of its stores, USA Today reported. The off-price retailer had already been having financial difficulties before the pandemic hit, which led to temporary store closures causing it to go into a “free fall,” according to the newspaper.
“Prior to the pandemic, we were gaining momentum in our merchant organization, growing our vendor base and improving brands, assortment and value for our customers, while investing in our technology and corporate leadership team,” CEO Steve Becker said in a statement obtained by USA Today. “However, the complete halt of store operations for two months put the Company in a financial position that can be effectively addressed only through a reorganization in Chapter 11.”
The company planned to permanently close about 230 of its 687 stores over the course of the summer, though it hopes to ultimately stay in business.
Brooks Brothers
Number of locations closing: 51
On July 8, Brooks Brothers filed for bankruptcy in a year that’s been financially brutal for many businesses. The classic retail chain announced that it would be closing stores as a result of the coronavirus pandemic, CNBC reported.
“Over the past year, Brooks Brothers’ board, leadership team, and financial and legal advisors have been evaluating various strategic options to position the company for future success, including a potential sale of the business,” a spokesperson for Brooks Brothers told CNBC. “During this strategic review, COVID-19 became immensely disruptive and took a toll on our business.”
Ascena Retail Group
Number of locations closing: 1,600
In July, Ascena Retail Group, which operates Ann Taylor, LOFT, Justice, Lane Bryant, Catherines and Lou & Grey, filed for Chapter 11 bankruptcy amid the COVID-19 pandemic.
According to court records, the retail group plans to reduce their stores from 2,800 to 1,200 — a 56% reduction overall, USA Today reported.
The plans include shuttering all of its Catherines brick-and-mortar stores, which offer affordable women’s plus-size fashion. However, according to Catherine’s brand message page, the store will continue to operate online.
As far as the other brands are concerned, the group will “continue to operate our Ann Taylor, LOFT, Lane Bryant, Justice and Lou & Grey brands through a reduced number of retail stores and online,” according to the “Investor’s Frequently Asked Questions” section of Ascena Retail’s site.
Le Tote
Number of locations closing: 38
In August, Lord & Taylor, the United States’ oldest department store at almost two centuries old, filed for Chapter 11. The high-end retailer’s owner, Le Tote, also filed bankruptcy.
Le Tote, the clothing rental company, bought Lord & Taylor last year from Hudson’s Bay Corporation for $75 million last year, reported Forbes.
After filing for bankruptcy in August, the retailer initially announced it would close only 24 stores and leave 14 open, reported ABC News. However, the next week, it announced all 38 locations would be closing.
“While we are still entertaining various opportunities, we believe it is prudent to simultaneously put the remainder of the stores into liquidation to maximize value of inventory for the estate while pursuing options for the company’s brands,” Ed Kremer, Lord & Taylor’s chief restructuring officer, said in a statement.
Tailored Brands
Number of locations closing: Up to 500
After announcing it would close up to 500 stores permanently, Tailored Brands, parent company to Men’s Wearhouse and Jos A. Bank, filed for Chapter 11 bankruptcy in July.
The company’s troubles come as no surprise as businesswear has been less in-demand due to many professionals working from home during the pandemic.
Tailored Brands said it secured support with more than 75% of its senior lenders for a $630 million debt restructuring plan that would allow it to survive bankruptcy, reported CNN Business.
Stein Mart
Number of locations closing: 279
Shortly after filing for Chapter 11 protection in August, discount store chain Stein Mart announced its plans to shutter all of its stores permanently, reported CNBC.
According to the “Going Out of Business Customer FAQ” section of the SteinMart.com website, liquidation sales will take place in stores only. The website will serve solely to promote in-store liquidation sales, help customers find their nearest store and provide answers to frequently asked questions.
On Aug. 12 via a press release, Hunt Hawkins, Chief Executive Officer and Chief Financial Officer of Stein Mart, Inc., said, “The combined effects of a challenging retail environment coupled with the impact of the Coronavirus (COVID-19) pandemic have caused significant financial distress on our business. The Company has determined that the best strategy to maximize value will be a liquidation of its assets pursuant to an organized going out of business sale. The Company lacks sufficient liquidity to continue operating in the ordinary course of business. I would like to thank all of our employees for their dedication and support.”
Century 21
Number of locations closing: 13
After nearly six decades, bargain department store chain Century 21 announced in September its plans to close. All 13 of the retailer’s locations — across Florida, New Jersey, New York and Pennsylvania — will be shuttered.
The store’s website serves to notify shoppers that the online going-out-of-business sale has ended but all stores are still open for business at this time.
Century 21 co-CEO, Raymond Gindi, blames the store’s insurers for the closures, not coronavirus itself. “We now have no viable alternative but to begin the closure of our beloved family business because our insurers, to whom we have paid significant premiums every year for protection against unforeseen circumstances like we are experiencing today, have turned their backs on us at this most critical time,” said Gindi in a press release.
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Cynthia Measom contributed to the reporting for this article.
This article originally appeared on GOBankingRates.com: Major Companies Going Bankrupt in 2020
