When big retailers go bankrupt
November 12, 2018
Patrick Collins, partner, was quoted in this article.
“Retail bankruptcy filings are going to go on for the foreseeable future,” said Patrick Collins, a partner at Uniondale-based Farrell Fritz who concentrates his practice on bankruptcy and restructuring and commercial litigation. “Even in a strong economy, the retail landscape is changing and the business models for some of these companies don’t work any longer.”
Part of the problem is that many of these stores – which have been struggling for years – have taken on incremental debt just to stay afloat.
“For a lot of bankruptcies, there was a prior restructuring that may have occurred, where a private equity firm may have been brought in to provide financing, but these are highly leveraged deals where the companies’ assets are pledged as collateral for the whole transaction,” Collins said. “In the case of Sears, the immediate impetus for the filing was that large debt service payments were coming due.”
Reprinted with permission from Long Island Business News, November 2-8, 2018, No. 44
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