Retail Bankruptcies’ Appeal to Investors

March 03, 2021

As bankruptcy attorneys look ahead to more bankruptcy filings in the year after the current lull, they anticipate that companies looking to acquire brands are likely to view getting involved in retail  bankruptcies as a part of their acquisition strategy.

“Certainly for investors who want to buy distressed assets, you get assets free of liability [in a bankruptcy],” said Patrick Collins of Farrell Fritz P.C., referring to the ability of retailers to use Chapter 11 proceedings to shed liabilities including liens and debts.

“You can have the target company shed unprofitable locations and the like,” he said. “The new paradigm in some of these retail cases is actually just to get the [intellectual property], not even the bricks-and-mortar, which gives you a lot of freedom, without the infrastructure and all the cost that goes with that, to reinvent the brand.”

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