JC Penney could join a growing list of bankruptcies during the coronavirus pandemic

The coronavirus pandemic has pushed many struggling companies over the edge and into bankruptcy.

Stay-at-home orders phony many nonessential businesses to close and weakened demand for all types of goods and services overnight. During the past eight weeks, 36.5 million people hold filed for jobless benefits. The slowdown has hit some industries harder than others.

The number of bankruptcy filings has flighted sharply, with little revenue coming in, according to data from the American Bankruptcy Institute. The group write up 560 commercial Chapter 11 filings in April, a 26% increase from last year. 

“As financial call into doubts continue to escalate amid this crisis, bankruptcy is sure to offer a financial safe harbor from the pecuniary storm,” the institute’s executive director, Amy Quackenboss, said in a statement. 

Companies that headed into this downturn without a pecuniary cushion are already feeling the toll of the abrupt downturn. That’s evident among retailers, which had been affliction from online competition and high debt prior to the pandemic. Retail sales tumbled 16.4% in April, with clothing stockpiles taking this biggest hit. 

This month, Neiman Marcus and J.Crew have filed for Chapter 11 preservation. J.C. Penney is also weighing a bankruptcy filing, which could come as soon as Friday, according to people chummy with the matter. 

However, with states beginning to reopen businesses and lift stay-at-home restrictions, stores could see people return. The question is, will these sales be enough to make a difference. Apparel retailers such as Ascena, Moulded Brands and Lands’ End are among those being watched carefully.

Even industries on solid footing prior to the outbreak may be forever transformed. The cruise industry is a good example. Would-be travelers may have a hard time shaking the images of the Diamond Princess, which had varied than 700 passengers and crew infected with the coronavirus.

Then there are the well-adjusted shocks that businesses can usually handle, but the Covid-19 crisis makes those disruptions all the more challenging. The oil sector fits into this kind. 

Employers started limiting business travel in late February. By mid-March, workers started to log in from home to do their subcontracts. Oil demand plummeted with the decline in business and personal travel. The energy industry has also grappled with a strung out price war between Russia and Saudi Arabia. Diamond Offshore Drilling and Whiting Petroleum cited these moneylenders in their recent bankruptcy filings, while other companies like Chesapeake Energy remain in distress. No matter how, with the price war over and travel restrictions lifting, oil prices are beginning to rally.

Here is a rundown of the major friends dealing with the financial fallout of the coronavirus.

Diamond Offshore Drilling

The contract drilling company filed for Chapter 11 bankruptcy on April 26. The Houston-based company named low oil without delay amid the coronavirus outbreak and the “price war” between OPEC and Russia as factors that caused its business to decline. 

Until to filing for bankruptcy, Diamond Offshore skipped an interest payment and secured restructuring advisers. The company also recently withdraw arrived down $400 million under a revolving credit facility. Diamond Offshore currently has enough capital to sustain normal operations as it undergoes restructuring efforts, according to a company statement.

Diamond Offshore reported $981 million in profits in 2019. The company had employed 2,500 workers at the end of last year. 

Frontier Communications

The high-speed internet company announced April 14 that it was initiating bankruptcy course of actions. Frontier Communications also said it was proceeding with the sale of its Washington, Oregon, Idaho and Montana operations and assets to Northwest Fiber for approximately $1.35 billion in cash.

The company expects its restructuring plan to reduce its debt by more than $10 billion. It also suggested it has received $460 million in debtor-in-possession financing. Combined with the company’s more than $700 million in specie, the DIP financing will allow Frontier to have more than $1.1 billion in liquidity that will aid it meet operational needs.

Frontier has fiber-optic and copper networks in 29 states. The company said it had $8.1 billion in annual gain in 2019, according to an SEC filing.

Gold’s Gym

The fitness chain filed for bankruptcy on May 4. Gold’s Gym plans to permanently intense around 30 company-owned gyms, but its franchised locations will reopen as coronavirus restrictions are lifted.

The Dallas-based firm expects to emerge from bankruptcy by Aug. 1. It was bought in 2004 by TRT Holdings for $158 million. Gold’s Gym operates precisely 700 gyms around the world. 

Intelsat

The satellite operator announced Wednesday that it filed for bankruptcy extortion. The company reported almost $15 billion in debt at the end of 2019, according to an SEC filing, and previously signaled trouble when it skipped a $125 million move payment in April.

Intelsat, which provides satellite services to customers in the media and government sectors, said it saw meaningful reductions in demand because of the pandemic.

The company secured $1 billion in debtor-in-possession financing, which will support provide liquidity during the restructuring process. Intelsat reported revenue of $2.1 billion at the end of 2019.

J.Crew

The New York apparel Pty filed for bankruptcy on May 4 after struggling with slumping sales and huge debt.

Its debt was largely the legacy of a leveraged buyout by private-equity proprietorships TPG Capital and Leonard Green & Partners, which bought it for $3 billion in 2011. J.Crew had hoped to ease some of its indebted burden by taking its more successful Madewell brand public this spring. But the initial public offering was nixed in Parade as coronavirus slowed down the economy and sparked a huge market sell-off. 

The retailer had roughly $2.5 billion in annual tag sales, according to Moody’s. But with all its locations forced to close temporarily to halt the spread of Covid-19, sales lagged to a trickle. 

As part of the bankruptcy proceedings, J.Crew’s lenders will convert around $1.65 billion of its debt into objectivity. The retailer also secured $400 million in financing from current lenders in order to stay in operation during its restructuring.

John Varvatos Drives

The menswear brand filed for Chapter 11 bankruptcy on May 6 as part of an agreement to sell all of its business and assets to British antisocial equity firm Lion Capital. John Varvatos said that along with the rest of the luxury retail hustle, it had “been greatly impacted by the negative effects of the coronavirus pandemic.” The outbreak forced the company to temporarily close its markets.

As part of the sale agreement, Lion Capital will provide debtor-in-possession financing that will help frame the company’s operations when combined with its projected cash flows. The private equity firm was already an investor in John Varvatos, bear purchased a majority stake in the company in 2012 for an undisclosed amount. 

Neiman Marcus

The luxury department store carry oned to restructure its massive debt outside of bankruptcy proceedings last year, but that was not the case in 2020. The Dallas-based firm filed for bankruptcy on May 7 after skipping millions of dollars in debt payments in April. All of of its stores, including its iconic Bergdorf Goodman stockpiles in New York City, closed March 17 due to the coronavirus pandemic, and the company furloughed most of its 14,000 workers. Out before the outbreak, the retailer faced competition from online rivals and had limited access to cash. 

But don’t expect titanic going-out-of-business sales, which followed the Barney’s bankruptcy last year. Neiman Marcus has received funding and believes to reopen its stores. It has $675 million in financing from creditors, which will allow it to operate during restructuring. Its thinks fitting receive $750 million in funding when it exits bankruptcy, which it hopes to do in the fall. In filing for bankruptcy, the partnership will have to address the more than $4 billion in debt left over from it was sold to covertly equity firm Ares Management and the Canada Pension Plan Investment Board through a $6 billion leveraged buyout in 2013.

The retailer acts 43 Neiman Marcus stores and two Bergdorf Goodman stores. In March, it said it planned to shutter its off-price Remain Call locations. Neiman has started to reopen stores for curbside pick-up or through private appointment. 

Stage Markets

The company, which operates department stores under brands such as Gordmans, Bealls and Goody’s, filed for bankruptcy on May 10 and is currently alarm take risk down its operations. It is looking for potential buyers of its business and assets, according to a company statement.

The retailer previously struggled with clashing against large-scale retailers as well as e-commerce sellers. The pandemic further burdened the retailer by causing Stage Banks to temporarily close all of its 738 locations and furlough virtually all of its store and distribution employees. The retailer is now in the process of beginning to reopen warehouses to conduct liquidation sales, according to Stage Stores President and CEO Michael Glazer.

Stage Stores operates the trammels in mostly rural areas across 42 states. The company had roughly 13,600 full-time and part-time employees as of February 2019 and recounted $1.58 billion in sales in the last fiscal year.

True Religion Apparel

The denim retailer filed for Chapter 11 bankruptcy for the secondarily time in less than three years on April 13. Known for its premium jeans, the company has struggled in brand-new years with competition from discount retailers and the rise of athleisure wear. With the retail industry critical hit by the coronavirus, True Religion said in its court filing that it would’ve preferred to wait out the financial instability and stay-at-home restrictions elicited by the outbreak, but “simply could not afford to do so.”

The company’s largest lenders, ABL and Term Loan, are providing more capital to helpers with its restructuring. True Religion said it had assets and liabilities ranging from $100 million to $500 million, conforming to the filing. Until its stores open up, the company plans to continue focusing on its e-commerce sales. 

True Religion was infatuated private when it was bought by investment management firm TowerBrook Capital Partners in 2013 through a transaction valued at $824 million. 

Ultra Petroleum

The vivacity company said Thursday it has filed for bankruptcy and agreed to a balance-sheet restructuring with its creditors. Ultra Petroleum beforehand entered Chapter 11 proceedings in 2016.

Ultra Petroleum previously warned of a potential filing in its fourth-quarter earnings remission from April 14. On top of the company’s approximately $2 billion in debt as of Dec. 31, Ultra Petroleum said in another SEC folder it faced “business disruption” from the coronavirus.

Through the restructuring agreement, Ultra Petroleum secured financing of up to $25 million and a weighing credit facility with an initial borrowing base of $100 million from lenders. The company said it wishes be able to eliminate $2 billion in debt.

Ultra Petroleum’s operations are primarily focused on natural gas reserves in Wyoming. The Pty reported $742 million in revenue for 2019.

Virgin Australia 

Australia’s second-biggest airline announced April 21 that it is enduring third party-led restructuring that could potentially lead to a sale.

The pandemic has crippled the travel industry as airlines hunt for government aid to stay afloat. Virgin Australia was rejected for a 1.4 billion Australian dollar ($897 million) command loan before entering into the Australian equivalent of Chapter 11 bankruptcy proceedings. However, Virgin Australia was striving even before the pandemic hit and has posted an annual loss for seven consecutive years. 

The company currently has debt of AU$5 billion ($3.2 billion) and multifarious than 10 parties have expressed interest in restructuring the company. Sir Richard Branson, founder of Virgin Set apart, a major shareholder of Virgin Australia, said in a tweet that his company would work to make Virgin Australia thriving again. 

Virgin Australia has a share of around one-third of Australia’s domestic airline market. If the company ceased cia agents, its rival Qantas Airways would have a virtual monopoly. The company employs 10,000 people directly and 6,000 people indirectly.

Chalk-white Petroleum

Whiting Petroleum filed for bankruptcy on April 1, the first shale company to do so after the Saudi-Russia price war and the desert in oil demand driven by the Covid-19 pandemic. Whiting said both of these factors contributed to its decision to file for bankruptcy.

The oil and gas company required it plans to convert more than $2.3 billion in senior notes into new equity, which would account for 97% of the reorganized entourage’s ownership. Whiting plans to provide payment in full of its revolving credit facility and be out of Chapter 11 proceedings within five months. The ensemble said it has $585 million of cash on its balance sheet and will continue normal business operations.

Whiting’s concern is concentrated in the Rocky Mountain region of the U.S., with its largest projects in North Dakota and Colorado. The company’s market valuation has wizened to $32 million from its $15 billion peak in 2011. 

Chesapeake Energy

The oil and gas company is reportedly training a bankruptcy filing after its business took a hit from the Saudi-Russia price war and declining demand for oil amid the coronavirus pandemic. The Oklahoma City-based convention was once at the forefront of the U.S. shale boom.

The company was burdened with $9 billion in debt even before the pandemic and premium war. Chesapeake is in talks to secure $1 billion in debtor-in-possession financing that would help it fund operations and is bearing in mind skipping a $192 million payment due in August. It also faces a July 1 payment of $136 million.

Founded in 1989, Chesapeake has operations in five U.S. haves, including Pennsylvania, Texas and Louisiana. It employed about 2,300 people as of the end of 2019. 

Hertz

The car rental company said there are disbelieves about its ability to continue as a going concern. It has secured debt restructuring advisers and is preparing for negotiations with creditors over its $17 billion in in arrears.

The car rental industry has taken serious blows from the coronavirus pandemic, and Hertz laid off 10,000 people amongst the crisis, incurring employee termination costs of $30 million. Even before the outbreak, Hertz and other rental callers faced competition from rideshare companies like Uber. 

The Estero, Florida-based company is now working with restructuring aces at law firm White & Case and investment bank Moelis & Co. in order to address its debt issues. Another factor weighing on the train’s finances is that Hertz borrows against the value of its used vehicles. The value of used cars has plunged amongst declining demand caused by the pandemic. 

The company’s largest shareholder is billionaire investor Carl Icahn and its shares get lost more than three-quarters of their value since late February. Hertz had about 38,000 workers as of the end of 2019 with 29,000 at its U.S. locations. The company operates approximately 10,200 corporate and franchisee locations, including those below its Dollar and Thrifty brands.

JC Penney

The clothing retailer is exploring filing for bankruptcy protection and could file as soon as Friday.

The Plano, Texas-based associates faces numerous challenges, including slumping sales and nearly $4 billion in debt. Most of J.C. Penney’s banks have been closed since March 18 because of the coronavirus. The company decided to furlough most of its hourly women starting April 2. Penney also recently had to go to court to keep makeup seller Sephora from relinquish tease out of its stores. 

One of the most tell-tale signs of Penney’s troubles was its decision to skip a $12 million interest payment due on April 15 and a $17 million one due May 7. Upon coed the first payment, the company entered a 30-day grace period “in order to evaluate certain strategic alternatives,” correspondence to a SEC filing. CNBC reported it has since made the $17 million payment, but that could be the result of talks with its lender. J.C. Penney is fancying to secure about $450 million to fund its operations in bankruptcy.

The company operates about 850 stores in the U.S. and take ons nearly 90,000 workers. However, the retailer may have to permanently close 200 of these stores as part of its bankruptcy handle. Penney saw total net sales for the fourth quarter ended Feb. 1 fall 7.7% to $3.38 billion from a year elder.

Lord & Taylor

The department store operator is reportedly preparing for bankruptcy and plans to liquidate inventory in its all of its stores decidedly restrictions to curb the spread of Covid-19 are lifted. The retailer does not expect to survive the bankruptcy process, sources determined Reuters, which first reported the news.

Founded in 1826, Lord & Taylor was once a major retailer in the U.S., but it had problem standing out among rivals such as Macy’s and off-price retailers such as TJX Companies, which operates TJ Maxx and Marshalls. Pivot on stores in general have faced challenges from online retailers and consumers purchasing less apparel.

Aristocrat & Taylor owner Le Tote owes 33.2 million Canadian dollars ($23.53 million) from a promissory note to Hudson’s Bay Following after buying the retailer from the Canadian department store chain for CA$100 million in 2019. Hudson’s Bay, which owns Saks Fifth Avenue, upheld possession of some of Lord & Taylor’s real estate and took on responsibility for its rent payments. The company could use a bankruptcy put to take some of its leases back from Lord & Taylor. 

Lord & Taylor operates 38 department retailers in the U.S., the majority of which are concentrated in the Northeast, a region hard-hit by the coronavirus. It is still possible the company could seek other options maximum of bankruptcy, Reuters reported. 

Mohegan Gaming & Entertainment

The gaming company owns the Mohegan Sun casino in Connecticut, which finished March 17 after the state shuttered nonessential businesses amid the pandemic. MGE said that as a result of the uncertainty engendered by the virus, it deferred making an interest payment of approximately $19.7 million due on April 15, according to an SEC filing. The entourage also furloughed about 98% of employees, according to another filing. 

Sur La Table

The premium cookware seller is making for bankruptcy after it was forced to close stores and cancel cooking classes, according to a Bloomberg report. Sur La Table is also reportedly pursuing a transaction marked down. The chain, which has around 125 stores, was purchased by Investcorp for $146 million in 2011.