Bankruptcy? Not So Fast

March 31, 2020

…[F]or retailers now dealing with the mass of store closures, supply chain delays and rent issues caused by the pandemic, the bankruptcy proceedings that would ordinarily bring them the relief they need may be harder to seek, attorneys said.

“The idea of a bankruptcy is to give a breathing spell to allow the company to continue to operate while in Chapter 11, and to formulate a plan to deal with its debts,” said Patrick Collins, a bankruptcy and restructuring partner at Farrell Fritz PC. “Given where we are right now…it would be very hard for anyone to model what an exit plan would look like.

“Right now, you can’t really model a liquidation with store sales, because you can’t do store sales — the kind of liquidation plan that happened in Barneys, and which was going to start in Modell’s, is just not going to happen at least for a couple months,” he said, referring to the Barneys New York liquidation sales that took place after its sale to Authentic Brands Group in November, and to Modell’s Sporting Goods Inc., which filed for bankruptcy this month.

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