Retail Bankruptcies of 2010 – Part II
In our December 2nd blog post, we discussed retail bankruptcy strategies and trends through September 2010, including the increase in prepackaged and prearranged bankruptcies to approve reorganization plans in as little as 90-days. We also commented on the increase in sales auctions and liquidations resulting from failed attempts to reduce overhead costs and right-size operations and the inability of retailers to restructure their debt. Over the last two months, these strategies and trends have continued in the retail industry.
Much like The Walking Company, JB Booksellers Inc.
, a Cincinnati-based book retailer, filed for bankruptcy on November 11, 2010 in order to reorganize its operations with a plan to close four of its nine stores by taking advantage of the bankruptcy code provision allowing a retailer to assume or reject certain commercial real estate leases. This continues to be a useful strategy for retailers to downsize operations by closing unprofitable stores and at the same time mitigating their lease damage claims.
Prepackaged and prearranged bankruptcies also continue to remain a preferred route when striving to effectuate a plan of reorganization. Similar to the bankruptcies of Claim Jumper Restaurants and Blockbuster, Inc. earlier in the year, Loehmann’s Holdings Inc., an apparel retailer, filed a prepackaged plan as a strategy to reduce its $115 million debt load and recapitalize its balance sheet. Loehmann’s also plans to reject 18 underperforming store leases.
Lack’s Stores, a furniture retailer, filed on November 15, 2010 in order to implement an orderly liquidation of its 36 stores. Lack’s plans a quick closing of all of its stores within a 70-day timeframe, in addition to the liquidation of all of its inventories. CB Holdings Corp.
, a restaurant chain operating under the brand names Charlie Brown’s Steakhouse, Bugaboo Creek Steakhouse, and The Office Beer Bar and Grill, filed for bankruptcy protection on November 18, 2010 in order to attempt a quick sale of its remaining 39 restaurants after closing 47 restaurants just before its bankruptcy filing.
With favorable sales results for November just reported, the prospects for improved holiday sales may benefit distressed retailers and limit the number of retailers that will file for bankruptcy during the remainder of 2010 and into early 2011.
What do you forecast for retail bankruptcies over the next few months?