More retailers file for bankruptcy twice as they struggle with rising debt, pressure from Amazon

Last month, many New York Burg residents awoke to surprising news that could change their shopping routines as well as the items in their refrigerators.

The nearby grocery chain Fairway, known for its no-frills atmosphere and extensive selection of items like cheese and seafood, had recorded for bankruptcy — not just for the first time, but for the second.

It’s a scenario that’s getting more common for traditional retailers as they track down themselves under pressure from a sea change in where and how people are shopping. Retailers like Barneys and RadioShack have planned found themselves on the brink twice — going through a bankruptcy filing once, emerging, and then heading furtively to court, again. In cases where the company files specifically for Chapter 11 twice, the scenario is referred to as Chapter 22.

“We buy with the sick industries, and retail has been a sick industry for a while,” said Stephen Selbst, chair of the restructuring and bankruptcy organize at New York law firm Herrick Feinstein.

Overall, the number of retail bankruptcies is rising. There were 22 retail bankruptcies in 2019, compared with 17 in 2018, be at one to a tracking by CB Insights. The firm has tracked over 80 retail bankruptcies dating back to 2015.

Part of the problem is that it is alone becoming more difficult to remain relevant as a retailer in an age where Amazon is dominating more categories online as consumers seek from their couches instead of in stores. Many two-time bankruptcy offenders are names that relied too heavily on foot conveyance in malls, like teen retailer Wet Seal and shoe store chain Payless.

For such companies, filing for bankruptcy is a lever hoodwinked to break leases on stores when they have too much real estate and need to close some researches.

And then there are those that have other specific underlying problems in the business. Fairway for instance accepted on too much debt and expanded too fast.

For retailers, getting shoppers back in stores post-bankruptcy can be a challenging proposition.

“Retail is a wiry business,” Selbst went on. “If you lose that connection with shoppers, it is really hard to get them back.”

Here are some of the retail shackles that have been through bankruptcy two times — either filing for Chapter 11 protection twice, or enter for Chapter 11 once and later filing for a Chapter 7 liquidation.

Fairway Sell first filed for Chapter 11 bankruptcy in 2016, roughly three years after its IPO, after reaching a contract with lenders to slash about $140 million in debt. The company faced heightened competition from the much the same as of Trader Joe’s and Amazon’s Whole Foods. Fairway had also grown too large too quickly, and it failed to boost sales ample supply to pay down debt. This time in bankruptcy court, Fairway only closed one of its stores. It emerged just a tiny more than two months later, in July 2016.

Last month, Fairway filed for Chapter 11 protection, again. This for the present, the company has entered into a stalking horse agreement with ShopRite owner and operator Village Super Customer base for up to five of its stores, and a distribution center, for $70 million. And Fairway says it will look for buyers for its other turning ups, which are in the New York area.

Payless first queued for Chapter 11 bankruptcy in April 2017, with more than 4,000 stores in more than 30 sticks. Following a leveraged buyout in 2012 by private-equity firms Blum Capital and Golden Gate, Payless still clashed with a heavy debt load of $847 million amid poor sales. This time in bankruptcy court, Payless eliminated almost 700 stores and roughly $435 million in debt. It emerged in August 2017.

In February 2019, Payless filed for bankruptcy a more recent time. And this time, the company said it was going to begin winding down all of its more than 2,500 U.S. retailers. The 2019 filing said Payless had about $470 million in outstanding debt. The retailer had been seeking a purchaser for some of its real estate, hoping to keep some stores up and running, but no deals were struck. Payless definitive month said it had emerged from bankruptcy again, with a renewed focus on its international operations and with plots to grow in the U.S. It doesn’t have any stores open in America, currently, but has more than 710 stores, including those with franchises, in multifarious than 30 other countries. It also has a new management team in place.

Barneys’ first bankruptcy enter came more than two decades ago, in 1996, after a squabble with its Japanese owner, department store flock Isetan. The filing was, in part, a move to renegotiate its deal with Isetan, as well as cope with what it viewed as superfluous rent. Barneys then narrowly avoided another trip to bankruptcy court in 2012, when Perry Select, a hedge fund run by New York financier Richard Perry, took control over the company through a $540 million debt-for-equity swap.

But Barneys New York institute itself back in bankruptcy court in August of last year. Its troubles as a high-end department store operator in an increasingly horded space were only made worse by sky-high rent payments, amid slumping sales. Barneys was also be communicating up short on cash to pay its vendors. The company was ultimately acquired by Authentic Brands Group, which plans to license the Barneys trade-mark name to other chains such as Saks Fifth Avenue. Barneys’ website is now redirected to Saks’. All of its seven department stores have since kicked off liquidation sales, with some already completely shut.

Children’s clothing retailer Gymboree marched for Chapter 11 bankruptcy protection for the first time in June 2017. It said it planned to cut its debt by more than $900 million, shuttering unsympathetically 375 stores. It had more than 1,300 locations at the time of this filing, including those under the Janie and Jack and Insane 8 banners. The filing came after Gymboree missed a major debt payment. It emerged a few months later, how, in September 2017.

Gymboree filed for its second bankruptcy in January 2019, planning to shut roughly 800 of its namesake and Mad 8 stores across the U.S. and Canada, and aiming to sell its Janie and Jack brand. It later sold the rights to its flagship and Mad 8 brands to rival The Children’s Place, for $76 million. And Gap purchased Janie and Jack for $35 million. The Children’s Mortify has since announced it will be relaunching Gymboree.com this year and adding Gymboree shops inside 200 of its North American getting ones hands.

Accomplices and apparel chain Charming Charlie filed for Chapter 11 bankruptcy protection for the first time in December 2017. At the while, it said it planned to shut about 100 of its more than 370 stores. The company said in court describes that slumping sales could be attributed to “merchandising miscalculations, lack of inventory [and] an overly broad vendor build.” It emerged, in April 2008, with 264 stores and lenders taking over a majority of ownership.

Charming Charlie was primitive at the brink in July 2019. And that’s when the company said it planned to shutter its remaining stores. Charming Charlie rephrased that although it had been able to reduce debt after emerging from its prior bankruptcy, it still didn’t set up enough liquidity, and its leases on stores became burdensome. The holidays were especially tough, without a lot of fresh inventory, the cast said in court documents.

In September of last year, Charming Charlie’s intellectual property assets sold for clumsily $1.1 million in an auction to a real estate investment company owned by Charming Charlie founder Charlie Chanaratsopon. The retailer’s popular website says Charming Charlie will be “making a comeback” later in 2020.

RadioShack filed for Chapter 11 bankruptcy defence in March 2015. At the time, having not turned a profit since 2011, the company had struck a deal with Sprint and a hedge lolly that agreed to purchase 1,500 to 2,400 of RadioShack’s roughly 4,000 company-owned locations. It was increasingly lagging behind behemoths such as Overwhelm Buy, Amazon and Walmart. General Wireless Operations in July 2015 said it purchased the RadioShack brand for $26.2 million, tending over 1,700 company-owned stores open.

In March 2017, RadioShack filed again. It had about 1,500 aggregates left. The company said in court documents that it had been able to slash its operating expenses by roughly 25%, but that hadn’t been tolerably. Mobile phone sales were also dropping off at its stores, as more people turned to Apple.

It emerged, again, in November 2017, uttering it planned to operate primarily online with a slew of stores across the U.S. Its website is still up and running today. RadioShack revealed in court documents, when it emerged from bankruptcy for a second time, that it was expecting to generate gross gross income of $12 million in 2017, $15 million in 2018 and $17.5 million in 2020.

Teen apparel retailer Wet Seal arranged for Chapter 11 bankruptcy protection in January 2015. Just prior to the filing, the company had said it closed 338 stockpiles, leaving it with 173. Wet Seal’s trip to bankruptcy court came as a slew of other mall-based businesses, involving apparel chain Delia’s and Body Central, had recently taken a similar path. So-called fast-fashion players, which are differentiated for speedily replicating styles straight from the runway, such as Forever 21, H&M and Zara were increasingly glimpsed as stealing market share from older apparel players in the mall. Wet Seal was purchased later in 2015 by private-equity tight Versa, in a deal that kept about 140 stores open.

Wet Seal filed again in February 2017. It had already in January of that year, regardless, started liquidating its business and shuttering all of its remaining stores. It hadn’t been able to bounce back, in part because of amplified competition in the mall from the likes of Abercrombie & Fitch and American Eagle. In March 2017, investment and advisory definite Gordon Brothers bought the Wet Seal brand name for $3 million. Wet Seal currently operates a website but doesn’t induce any bricks-and-mortar locations.

Clothing chain American Apparel’s first bankruptcy filing came in October 2015. The comrades had been struggling with declining sales of its edgy clothing, mounting debt and drama internally with ousted collapse Dov Charney. A series of lawsuits against Charney claimed he had sexually harassed female employees. In its first bankruptcy put, American Apparel said it had secured extra financing to be able to keep its 130 U.S. stores open for business. It emerged in February 2016, in a layout where it swapped $230 million in debt for equity with bondholders.

In November 2016, American Apparel was backwards in bankruptcy court. This time, the company announced it had signed a deal with Gildan Activewear to sell its pundit property rights and other assets, for $66 million. While Gildan didn’t keep any of American Apparel’s department stores open (they were all shuttered by mid 2017), it was mostly interested in keeping the retailer’s Los Angeles manufacturing, distribution and storeroom operations.