As Covid-19 swept across the globe and sent people to hospitals, business owners faced a new crisis. The government imposed a mandatory lockdown for several days, and people stopped leaving their homes. Suddenly, there were no workers in the factories or customers in the stores. Business production and revenue took a huge hit.
The outcome was disastrous. 2020 witnessed around 160 companies file for bankruptcy, the highest number in recent history.
2021 has not seen a positive shift. Several companies have already filed for bankruptcy in the first quarter, while others are planning to submit their paperwork.
Companies that went bankrupt in 2020
Here are a few of the household names that filed for corporate bankruptcy.
Hertz – Covid-19 disrupted the travel and tourism industry in 2020. A sharp decrease in business travel and low demand for rental cars caused financial strain. Without the means to pay off its $400 million debt, the company moved to file for bankruptcy in May 2020.
The bankruptcy process was not smooth. Hertz has proposed a revised bankruptcy exit plan to the court and is waiting for its verdict.
J.C. Penney – The 118-year-old company filed for Chapter 11 bankruptcy in May 2020. The pandemic, however, did not cause their financial hardships. The retail store had been struggling financially for over a decade and had a massive amount of debt. In November 2020, Brookfield Asset Management Inc. and Simon Property Group acquired the assets with cash. The bankruptcy court approved it, which gave J.C. Penney some relief.
Punch Bowl Social – Punch Bowl is famous among its patrons for bringing food and entertainment to the same place. However, decrease in restaurant dining in 2020 pushed them toward Chapter 11 bankruptcy.
J.Crew – Retailers faced many challenges in summer 2020, especially in their brick-and-mortar stores. Malls were closed, and customers were shopping online. The “American multi-brand speciality retailer,” J.Crew, incurred a massive loss with a sharp decline in sales. However, Covid-19 is not the only reason. J.Crew was already suffering a loss due to stiff competition from online retailers over the past few years. The pandemic just made the problem worse.
J.Crew filed for bankruptcy in May 2020 to eliminate $2 million of debt. Fortunately, J.Crew’s largest lender, Anchorage Capital Group, became the company’s biggest stakeholder in September 2020. This move helped them to exit bankruptcy.
Lord & Taylor – The country’s oldest department store filled with memories found itself in a financial crisis. They filed for business bankruptcy in August 2020 and closed all stores.
Tailored Brands – 2020 ushered us into the virtual world where companies hold business meetings over Zoom. Khakis replaced formal suits. It was a lethal blow to the many retailers, including Tailored Brands.
Tailored Brands is the parent company of Men’s Wearhouse and Jos. A Bank—two premium brands for male sweatpants. Both the brands suffered a loss last year, and Taylor Brands had to close 500 stores and file for bankruptcy in August 2021.
Other companies who filed for bankruptcy
- Stage Stores
- Roots USA
- Neiman Marcus
- Lucky Brand
- John Vartos
- Frontier Communications
- Pier 1
- Muji USA
- Furla USA
- Tuesday Morning
- J Hilburn
- Stein Mart
- True Religion
- Furniture Factory Outlet
- Sur La Table
Companies that filed for bankruptcy in 2021
Paper Source – They filed bankruptcy in March 2021. Out of 160 stores, 148 of them are open. As the third major stationary chain in America, Papersource suffered massive losses in 2020 due to the pandemic and remaining closed during the holiday season.
Fresh Acquisitions, LLC – Fresh Acquisitions, LLC, is the parent company of the popular steak and buffet restaurants Furr’s Fresh Buffet, Old Country Buffet, and Tahoe Joe’s Famous Steakhouse. Fresh Acquisitions filed for bankruptcy in April 2021 because they have experienced substantial financial loss due to the pandemic. Since filing for bankruptcy, they have reduced their number of restaurant chains from 100 to 6.
Solstice Marketing Concept LLC – With a 50% reduction in retail sales, the company had no option but to file bankruptcy in February 2021. It is uncertain how many of their 65 stores across the country will remain open.
The company doesn’t have the money to repay the estimated $1 million to $10 million it owes to its 999 creditors.
Studio Movie Grill – Dinner and a movie is the perfect way to spend a Friday night out, and Studio Movie Grill found a genius way to combine the two. But in 2020, Americans enjoyed both food and entertainment at home. The pandemic and a steady decline of customers forced Studio Movie Grill to remain closed for three months and submit bankruptcy paperwork in October 2020.
Christopher and Banks – One of the most popular women’s clothing chains in the US submitted bankruptcy paperwork in January 2021. It plans to close almost 449 stores across the country and transition to e-commerce businesses due to a massive drop in sales.
Companies that may file for bankruptcy in 2021
Steak ‘n Shake – They have escaped bankruptcy until now. However, according to Restaurant business, unless Steak ‘n Shake devises a great financial plan, bankruptcy will be tough to avoid this year.
Dave & Buster’s – This popular restaurant and entertainment business with 140 locations in the US is in trouble. Unless they strike a deal with lenders, bankruptcy is inevitable. The food and beverage revenue in the fourth quarther of 2020 dropped by 73%, and other revenues plunged 60%. The company has already declared that they might lay off 1,300 workers if the situation doesn’t improve.
Party City – Covid-19 has put an end to birthday parties and lavish wedding celebrations, reducing Party City’s leading drivers. However, Party City was facing financial trouble before the pandemic. According to Retail Drive, the company had half a billion dollars of debt in 2019. The helium shortage for balloons and Halloween only made their financial situation worse.
The second wave of Covid-19 is deadly. Party City’s 2021 outlook doesn’t have much hope.
J.Jill – They have been facing financial problems since 2019. Pandemic-related closures only increased their debts, leaving them in a bind. Now, they don’t have money to pay what they owe.
Rite Aid – Rite Aid has survived despite the steep competition from Target, Walmart, CVS, and Walgreens. They have sold some of their stores to pay a portion of their debt. But they still owe a lot of money to creditors. There is speculation that they will have to file bankruptcy in the future.
The Children’s Place – The largest Children’s apparel company has decided to close 300 stores. According to 24/7WallSt.com, they had a total loss of $46.6 million in the second quarter of 2020. They hope online sales will boost their revenue. If that doesn’t work, they may not be able to avoid bankruptcy.
Checkers and Rally’s, Sea World, Potbelly Sandwich Shop, AMC Theatres, Sears and Kmart, GameStop, L Brands, and Forever 21 are all at risk of filing bankruptcy in 2021. All eyes are on them now.