6 companies filing for bankruptcy in May

6 companies filing for bankruptcy in May

Retailers were already struggling and now effect of coronavirus. However, a major gym brand and a large car rental company have recently filed for bankruptcy.

The application for bankruptcy does not necessarily mean that a company will be fired. Many are using bankruptcy to reduce debt and other liabilities while closing unprofitable operations, hoping to become leaner and stronger. Many of these companies made record profits, including automakers General engines (GM)and many airline companies of the country.

Still, many brands that filed for bankruptcy to survive in business did not survive. US-based companies opened in May:

Gold’s Gym on May 5 To fend off the virus “deeply and in many ways”, involving the temporary closure of most 700 global gyms.

The statement said Chapter 11 bankruptcy protection will help “become stronger and ready to grow”.

The 55-year-old company planned to get out of bankruptcy by August and said “it was definitely not going anywhere”. Gold’s closed 30 venues in April, but does not intend to permanently close more gyms.

Hertz

Car rental giant Hertz (HTZ) applied for He went bankrupt on May 22. The company also rents cars under the brands Dollar, Thrifty and Firefly.

The company has been operating since 1918, when it set up stores with a dozen Ford Model Ts. Hertz, II. He survived the Great Depression, which was almost a halt in US auto production of World War II and a large number of oil price shocks.

By declaring bankruptcy, the rental car company says it plans to stay in business while restructuring its debts so that it can emerge financially.

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“The impact of Covid-19 on travel demand was sudden and dramatic, causing a sudden drop in the company’s revenue and future bookings,” the company said. Said. -The car market will be fully on sale, which requires today’s move. “

Criticized for Hertz paying millions of dollars as a bonus just before bankruptcy and a month after they started firing thousands of employees.

According to a file made to the Securities and Exchange Commission, the company paid a total of $ 16.2 million to 340 executives on May 19, trying to reorganize.

JC Penney

Coronavirus may be the final blow to 118-year-old department store JCPenney. It was already struggling to overcome ten years of bad decisions, administrative instability and damaged market trends.

JC Penney (JCP) filed for bankruptcy The company has an agreement with many of its lenders that will allow it to attempt a return plan to stay in business.
But it will close 30% or about 200 of 846 US stores. The company has not said how many of its 85,000 employees will lose their jobs as a result of permanent store closings.

“We have made substantial progress in rebuilding our company until this pandemic appears,” said CEO Jill Soltau, adding that the company’s efforts are “already paying.”

But JCPenney’s problems are returning long before the pandemic, and the company ten years of bad decisions. Its most profitable year was 2010, and since then its net losses have been $ 4.5 billion.
And while more consumers were shopping online, the entire store industry suffered. Big box discounts like Walmart (WMT), Target (TGT) and Costco (COST) It also proved to be a competition that offers shoppers a variety of products, such as lower prices and foods not available in markets.

J.Crew Group

A distinction that no one wants: J. Crew Group became first national US retailer The coronavirus pandemic applied for bankruptcy protection because it forced a wave of store closings. It was filed on May 4.

Owning the Tiki J.Crew and Madewell brands, the company expects to remain in business and get out of bankruptcy as a profitable company. And the fast growing denim brand Madewell, which has been refined for an IPO, will continue to be a part of the business.

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J.Crew Group has been upset by a heavy debt burden since its acquisition from private equity companies TPG Capital and Leonard Green & Partners in 2011 with a $ 3 billion deal.

It had grown rapidly in nine years since the transaction was completed and almost doubled its number of stores. But he also accumulated much more debt. Before the deal was announced, it had a $ 50 million long-term debt in 2010 – and by February this year it had risen to $ 1.7 billion.

The company operates about 500 stores, including J.Crew’s factory outlets.

Neiman marcus

Luxury retailer Neiman Marcus, which Filed for bankruptcy on 7 MayHe said the reorganization agreement with creditors would allow “to significantly reduce debt and position the company for long-term growth”.

The company’s history goes back to its first store in Dallas, home to 113 years ago. The company also operates the Bergdorf Goodman and Last Call chains.

Neiman As of last year, it had 69 stores among the three brands. In March, the company was only a few days before the epidemic closed its mass warehouse, The “majority” of 22 Last Call outlet stores.

The fate of ITS was sealed in 2013, when Ares Management and the Canadian Pension Plan Investment Board paid the company $ 6 billion for a leveraged acquisition.

“The biggest problem with Neiman is, [private equity companies] Steve Dennis, a retail consultant and former Neiman manager, previously told CNN Business that he paid a lot of money and took on a lot of debt.

Tuesday morning

Discount household goods retailer Tuesday morning (TUESDAY) accused the virus of prolonged store closings. “insurmountable financial barrier.”

CEO Steve Becker said the job was successful before the pandemic. However, the resulting temporary store closings and employee progression “had serious consequences for our business”.

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“The complete cessation of store operations for two months has put the company in a financial situation that can only be effectively addressed in Chapter 11 through restructuring.”

Opened on May 27, the Dallas-based chain said it will permanently close approximately 230 of nearly 700 US stores.

CNN Business’ Chris Isidore and Nathaniel Meyersohn contributed to this report.

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About the Author: Abbott Hopkins

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