6 companies that filed for bankruptcy in May

6 companies that filed for bankruptcy in May

Retailers had already been struggling, and are now enduring the worst part of the coronavirus impact. But a large gym brand and a major car rental company have also recently filed for bankruptcy.

A bankruptcy does not necessarily mean that a company goes bankrupt. Many use bankruptcy to get rid of debt and other liabilities by closing unprofitable trades, hoping to emerge more nimble and stronger. Many of these companies have posted record earnings, including the automaker. General Engines (GM)and many of the nation’s airlines.

Still, many other brands that have filed for bankruptcy with the intention of staying in business did not survive. These are some companies based in the USA. USA Who submitted their request in May:

Gold’s Gym said on its May 5 He believes that the virus has affected him “deeply and in many ways”, including the temporary closure of many of its 700 world gyms.

Filing for Chapter 11 bankruptcy protection will help you “emerge stronger and ready to grow,” the statement continued.

The 55-year-old company intends to emerge from bankruptcy in August and said it “will not go anywhere.” Gold’s closed 30 locations in April, but does not intend to permanently close more gyms.

Hertz

Car rental giant Hertz (HTZ) requested bankruptcy on May 22. The company also rents cars under the Dollar, Thrifty and Firefly brands.

The company has been in business since 1918, when it settled with a dozen Ford Model Ts. Hertz has survived the Great Depression, the near-total shutdown of U.S. auto production, and numerous shocks to the price of oil.

By filing for bankruptcy, the car rental company says it intends to stay in business while restructuring its debts so that it can emerge financially healthier.

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“The impact of Covid-19 on travel demand was sudden and dramatic, causing an abrupt decline in the company’s revenue and future bookings,” the company said in a statement, noting that “uncertainty persists about when revenue will return. and when -car market will reopen entirely for sales, which required today’s action. “

Hertz was criticized for pay millions of dollars in bonds its executives just before its bankruptcy, and a month after it began laying off thousands of employees.

He paid a total of $ 16.2 million to 340 executives on May 19 as part of a plan to keep them in place as the company tries to reorganize, according to a document filed with the Securities and Exchange Commission.

JCPenney

The coronavirus could be the final blow to the unconditional department store JCPenney, 118. It was already struggling to overcome a decade of bad decisions, executive instability, and damaging market trends.

JCPenney (JCP) declared bankrupt May 15. The company has an agreement with most of its lenders that will allow you to try a recovery plan to stay in business.
But it will close 30%, or about 200, of its 846 stores in the United States. The company did not say how many of its 85,000 employees would lose their jobs as a result of the stores’ permanent closure.

“Until the pandemic erupted, we had made significant progress in rebuilding our company,” CEO Jill Soltau said in a statement, adding that the company’s efforts “had already begun to bear fruit.”

But JCPenney’s problems date back long before the pandemic, and the company was hit by a decade of bad decisions. Its most recent profitable year was 2010, and its net losses have totaled $ 4.5 billion since then.
And the entire department store sector has suffered as more consumers shop online. Big discount stores like Walmart (WMT), objective (TGT) and Costco (COST) They have also proven to be competitive, offering shoppers lower prices and a selection of items not found in department stores, such as groceries.

J.Crew Group

It is a distinction that nobody wants: J. Crew Group became America’s First National Retailer USA file for bankruptcy protection as the coronavirus pandemic forced a wave of store closings. It was presented on May 4.

The company, which owns the preppy brands J.Crew and Madewell, hopes to stay in business and emerge from bankruptcy as a profitable company. And Madewell, the fast-growing denim brand that had been slated for an IPO, will continue to be part of the business.

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J.Crew Group suffered a heavy debt load since its 2011 purchase of private equity firms TPG Capital and Leonard Green & Partners in a $ 3 billion deal.

It had grown rapidly in the nine years since the transaction was completed, nearly doubling the number of stores. But it has also accumulated much more debt. He had $ 50 million of long-term debt on his books in 2010, before the deal was announced, and as of February this year that number had skyrocketed to $ 1.7 billion.

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

Neiman Marcus

Luxury retailer Neiman Marcus, who filed for bankruptcy on May 7He said the restructuring agreement with creditors will allow him “to substantially reduce debt and position the company for long-term growth.”

The company’s history dates back 113 years to its first Dallas store, which remains its base of operations. The company also operates the Bergdorf Goodman and Last Call chains.

Neiman It had 69 stores among the three brands as of last year. In March, just days before the pandemic triggered the closure of mass stores, the company announced plans to permanently close “majority” of its 22 Last Call outlet stores.

Their fate was possibly sealed in 2013 when Ares Management and the Canada Pension Plan Investment Board paid $ 6 billion in a leveraged purchase, making the company private.

“The big problem with Neiman is that the [private equity companies] he paid too much and accumulated too much debt, “Steve Dennis, a retail consultant and former Neiman executive, previously told CNN Business.

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Tuesday in the morning

Discounted home goods retailer Tuesday in the morning (SEA) blamed the virus for the prolonged closure of stores that caused a “insurmountable financial hurdle”.

CEO Steve Becker said the business was thriving before the pandemic. But the resulting temporary store closings and employee permits had “serious consequences for our business.”

“The complete disruption of the store’s operations for two months placed the company in a financial position that can only be effectively addressed through a reorganization in Chapter 11,” it said in a statement.

The Dallas-based chain, which launched May 27, said it will permanently close approximately 230 of its nearly 700 stores in the United States.

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

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Cary Douglas

About the Author: Cary Douglas

Wayne Ma is a reporter who covers everything from oil trading to China's biggest conglomerates and technology companies. Originally from Chicago, he is a graduate of New York University's business and economic reporting program.

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