Bankrupt Retailers: Pushed to the Brink

Business Week reports:

Several retailers that have filed for Chapter 11 protection (BusinessWeek.com, 7/21/08) since the economy started swooning have unraveled just as quickly: Wickes Furniture closed down its 36 stores. Friedman's is in the process of selling off jewelry and is closing its 377 stores, while Whitehall Jewelers is liquidating its 300 stores. All these companies filed for bankruptcy reorganization in 2008. And in December 2007, Bombay Co. and Levitz closed all their stores.

The new provisions in the bankruptcy law—pushed primarily by mall owners, suppliers, and utility companies, and signed by President George W. Bush in 2005—were intended to shorten the time that a company stays under court supervision. The point was to protect creditors, who sometimes had to wait years for payments while lawyers racked up hefty fees and managers collected big pay packages.

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