List of companies that filed for bankruptcy in 2020 due to COVID-19

The year 2020 has been a rough year for many companies, from retail restaurants to entertainment industries and other kinds of businesses, the economic impact of the coronavirus pandemic on businesses cannot be quantified. The pandemic has not only forced some stores to change their business tactics but also made many businesses that cannot afford some of the innovation brought by the virus to file for bankruptcy. 

The pandemic brought with it a decrease in consumers' demand and an increase in stay at home orders which implies that most consumers would rather make their order online than visit a store or company. In the entertainment industry, the pandemic has led to a huge drop in entertainment spending and activities. 

The effect of lockdown on the economy.

Despite the current slow reopening of business activities after the lockdown triggered by the pandemic, the social distancing measure is not helping matters. In fact, there is no sign that this would stop any time soon. Social distancing might continue for a long time. What this implies is that many people would still prefer to order online instead of visiting the stores. A lot of businesses including restaurants, entertainment industries, and other retail stores are suffering a great deal as a result of the impact of the pandemic. Based on this, the number of companies filing for bankruptcy has been on the increase. 

However, it is important to note that most of the companies that are filing for bankruptcy are already experiencing financial issues before the outbreak. Most of them were already teetering on the brink of collapsing before the outbreak of the coronavirus. With the outbreak of the pandemic, the companies were immensely affected and driven into filing for bankruptcy. The lockdown measure put in place to contain the virus was more like the last straw for these companies. 

“It has been a poorly-kept secret that a number of the big-box retailers were struggling,” says Scott Williams, a bankruptcy attorney at RumbergerKirk. “There has not been a dramatic uptick in the last 45 days. What I think you’ve seen is lots of people being forced into, ‘I’m going to get there at some point.’”

Although bankruptcy does not necessarily mean the company would stay out of business or close down, it does mean that some of the companies activities would be affected. In fact, it could mean the total liquidation of some of these companies. With the rising increase in the number of companies filing for bankruptcy, the economy of the nation would also suffer.

Below is a list of companies that have filed for bankruptcy since the outbreak of the coronavirus. 

• Pier 1 Import
• True Religion
• Art Van Furniture
• Modell's Sporting Goods
• RTW Retailwinds
• J. Crew
• Neiman Marcus
• JC. Penny
• Lucky Brands
• GNC Holdings
• Sur la Tables
• Brook Brothers
• Ascena Retail
• Tuesday Morning
• Bluestein
• Paper Stores
• Stage

Pier 1 Import.

Pier 1 Imports (PIRRQ), a retail chain company for home goods first filed for Chapter 11 bankruptcy in February. In the file, the company listed about $340.6 million in liabilities and announced that it would be seeking court approval in May. This implies that while the company would still remain in business, it would work on plans to cut costs and make profits. 

Prior to filing for bankruptcy, the company has been seeking buyers for some of its assets. Left with no option after a futile search, the company filed for bankruptcy. 

Filing  Chapter 11 bankruptcy would allow the company to map out strategies and ways to keep its business afloat. These strategies would also include plans on how to handle the company's debt. Usually, this type of bankruptcy allows the business to increase its rate and offer more services so as to increase its profit. 

Meanwhile, the company is already working on selling its intellectual properties and other online assets for $31 million to a company known as Retail Ecommerce Ventures.

True Religion

True Religion, a very popular company known for its unique jeans design filed for Chapter 11 bankruptcy on April 13 with a list of liabilities ranging from $100 million to $500 million. The company has more than 26 stores in the United States and is among the companies that are worst-hit by the pandemic. However, it is important to note that this is the company's third bankruptcy in three years. 

Also, like Pier 1 Import, the company would be focusing on strategies to use to keep its business afloat and also how to pay its debt. 

In the court documents submitted by the company, it states that it would have preferred to wait till the pandemic has reduced but "simply could not afford to do so." 

True Religion hoped to emerge from bankruptcy before the end of the year after getting a secured debt of $138.5 million and another $44 million owed to unsecured creditors.

Art Van Furniture

The popular home goods chain, Art Van Furniture, is also among the list of companies filing for bankruptcy this year. The company filed for bankruptcy on March 8 with a list of liabilities ranging from 100 million to 500 million. 

Also, the company would be permanently closing down a large amount of its 190 stores and map out plans to alleviate its current financial level. Although Art Van Furniture has been facing some financial challenges before the outbreak of the virus, the decision to permanently close some of its stores was triggered by the impact of the pandemic. At first, the company filed for Chapter 11 bankruptcy, however, the negative effect of the pandemic made it convert this to a Chapter 7 liquidation in early April. In fact, a report revealed that some of the Art Van Furniture stores are being replaced by a new name "Levin Furniture."

Modell's Sporting Goods

The sporting goods chain filed for Chapter 11 bankruptcy on 11 March with a list of liabilities ranging from $1 million to $10 million. During the period of the file, the company already planned to close down its remaining 140 stores. This is because most retailers are already shopping from Amazon. In fact, the company suffered a poor holiday season in 2019. 

With the outbreak of the virus, things got worse for the company. Following the current gradual reopening of business activities after the lockdown, the company resumed liquidation after summer. 

RTW Retailwinds

RTW Retailwinds, the parent company of New York & Co filed for bankruptcy on July 30 with a list of liabilities ranging from $100 million and $500 million. 

The company revealed that it is planning to close “a significant portion, if not all” of its 378 stores and also evaluating potential buyers for its e-commerce division. The company added that it would be selling intellectual properties in bankruptcy proceedings.

J.Crew

According to The Times, J.Crew is the “first major retail casualty” of the coronavirus pandemic. This statement was made when the J. Crew's parent company filed for Chapter 11 bankruptcy in May. However, J.Crew has said that it will continue its day to day activities despite the latest development.

Neiman Marcus

Neiman Marcus, the upscale department store, filed for bankruptcy on May 7th with a list of liabilities of about $1 billion. Last week, a court filing confirmed that the company would be permanently closing its recently opened store in New York City. This would also include two of the company's other stores in Florida and Washington respectively. 

During a hearing to approve the company's plan to alleviate its bankruptcy, some of the company's lower-ranking debtors complained of some asset transfer in 2008. With this, the permanent closure of the company was approved. Following the approval, the company would be closing its stores around the United States. 

JC. Penney bankruptcy details

With over 850 stores, JC. Penney filed for Chapter 11 bankruptcy on May 15 with a list of liabilities of more than $1 billion. Though the company's fate is still being decided in the court, it has closed down more than 100 stores and laid off more than 1000 employees. According to a report, the company has until July 31 to convince the court of a working business plan. 

However, the company submitted a plan to split its business into two publicly traded companies with the other working as a real estate investment trust. 

Lucky Brand going out of business

With a list of liabilities ranging from $100 million to $500 million, the denim brand company, Lucky Brand filed for bankruptcy on July 3rd. The company revealed that it would permanently close down at least 13 of its over 200 stores across the United States. 

Lucky Brand, interim CEO Matthew Kaness revealed in a statement that “The COVID-19 pandemic has severely impacted sales across all channels."

The company is currently in a deal with a venture store known as Sparc Group LLC. Sparc Group LLC is offering to buy the company's asset for $140.1 million in cash and $51.5 in debt. The deal is yet to be approved by the bankruptcy court. 

GNC holdings Bankruptcy story

The health chains company, GNC Holdings, is also among the list of companies that have filed for bankruptcy. GNC filed for bankruptcy on July 23 with a list of liabilities of about $1 billion. During the period of the filing, the company revealed that it would permanently close at least 1,200 stores out of its 5,200 stores. Also, the company is seeking buyers for some of its assets. 

According to GNC Holdings, the coronavirus pandemic only heightened the "financial pressure for the past several years."

The company hoped to emerge from bankruptcy before the end of the year

Sur la Tables

One of the biggest kitchen utensils companies in the United States, Sur la Tables filed for Chapter 11 bankruptcy on July 8. This is followed by a list of liabilities ranging from $50 million to $100 million. 

However, the company revealed that it is already planning on the permanent closure of 52 out of its 121 stores. According to the company, the major effect of the pandemic on its service is the inability to continue with its popular in-person cooking classes. 

However, the CEO of the company, Jason Goldberger said in a statement that the post-bankruptcy “sale process will result in a revitalized Sur La Table, positioned to thrive in a post-COVID-19 retail environment.”

Brook Brothers

The popular men apparel company, Brook Brothers filed for bankruptcy on July 8th with a list of liabilities valuing between $500 million to $1 billion. 

While the company awaits the court decision by next month, Sparc (Simon Property Group and Authentic Brands Group) is currently bidding on the company's assets for $350 million. This is to help salvage at least 125 Brook Brothers stores. Also, WHP Global, a rival to ABG, is looking forward to bidding for Brook Brothers. Additionally, Simon, the biggest mall owner in the United States teamed up with ABG to offer Brook Brothers a loan of $80 million with no interest.  This is to help the company with its restructuring plan while it keeps searching for a buyer.  

Claudio Del Vecchio, the owner of Brook Brothers told the Wall Street Journal that the outbreak of the virus only heightened the company's struggle "amid a national shift to more casual dress." 

Ascena Retail Group

Ascena Retail Group, the parent company for Ann Taylor and Loft is also among the list of companies that have filed for bankruptcy. Ascena Retail Group filed for bankruptcy on July 23 with a list of liabilities valuing more than $1 billion. As of the time of filing, the company has more than 2500 stores across the United States. 

In one of its reports, The Times presented a clear picture of the company's fall over the past five years. “Ascena’s stock, which traded at nearly $300 a share in July 2015, had plunged below $1 by the time of the company’s bankruptcy filing.”

The company revealed that part of its plans to return back to profitability would include a permanent closure of some of its stores across the United States. According to the company, the number of stores that would be closed would be based on "the ability of Ascena and its landlords to reach agreement on sustainable lease structures." 

Tuesday Morning

Tuesday morning is one of the companies that are worse hit by the outbreak of the coronavirus pandemic. According to the company, the pandemic created an “insurmountable financial hurdle.”  As a result of this, it filed for bankruptcy in May. The company is currently planning on closing down more than 200 of its 700 stores. 

Stage 

The Discount retailer and parent company of Bealls, Gordmans, Goody's, Palais Royal, and Peebles is among the companies that filed for bankruptcy. Stage filed for Chapter 11 bankruptcy on May 10. The company is already closing down some of its almost 800 stores across the United States. 

The potential of more companies filing for Bankruptcy and the expected economic impact

According to Epiq, there are almost 4000 cases of companies filing for bankruptcy in the first half of 2020 alone. Out of the 4000 companies, 600 companies filed in June alone. The situation, according to experts, promised to get worth as more companies are still laying off their staff, closing their stores, and planning on restructuring. The Times reports that 

"Edward I. Altman, the creator of the Z score, a widely used method of predicting business failures, estimated that this year will easily set a record for so-called mega bankruptcies — filings by companies with $1 billion or more in debt. And he expects the number of merely large bankruptcies — at least $100 million — to challenge the record set the year after the 2008 economic crisis."

While bankruptcy could be a good way for both companies and individuals to scale out of huge debts, when the numbers of companies or individual filing for bankruptcy are on the increase, it could spell doom to the country's economy. Increasing bankruptcy is a clear sign of economic recession or depression. 

When more and more companies are filing for bankruptcy, other companies and individuals who might be interested in lending out their money would start becoming skeptical. Consumers would start becoming more conscious of their spending. This would inadvertently increase the number of bankruptcy and further reduce the outflow of money. It would also stifle the economy of the nation.

With the increasing number of companies filing for bankruptcy, the economy of the country might suffer a further downturn.