After changes to the U.S. bankruptcy code in 2005, retailers that are forced to file for bankruptcy protection are also less likely to survive. Those changes shortened the time frame that retailers have to get approval for restructuring or a sale; companies only have 210 days to decide whether to hold onto or get rid of store leases.Square footage in the news.
Brick-and-mortar retailers, especially, have been hit hard. Instead of getting out of unprofitable leases and emerging from bankruptcy as a leaner business, many end up going out of business entirely and selling their brand.
That has led to an environment in which only the savviest company, especially those with physical stores, can survive.
“It’s the law of nature,” Johnson said. “Whether it’s an animal species or a retailer, the weakest players get winnowed out.”
Since 2005, 55% of retailers that have filed have ultimately liquidated their business, compared to 5% of bankruptcies in other industries, the AlixPartners survey said.
This year is expected to be another big year for bankruptcies.
“You’re going to see one every single month in 2017,” said Lopez-Castro. “Once you lose a customer, it's very hard to get that customer back.”
Monday, March 20, 2017
Since 2005, 55% of retailers that have filed have ultimately liquidated their business, compared to 5% of bankruptcies in other industries
The L.A. Times reports:
Posted by Steve Bartin at 9:45 AM