As online retailers like Amazon continue to dominate the market, brick and mortar retail stores in Texas continue to struggle. These businesses, which oftentimes have trouble getting people into their stores, can face massive amounts of debt as they try to either rebrand themselves or change their way of doing business to be competitive. Others just simply fail to change with the times and are left with burdensome debt that is insurmountable.
When a business is unable to pay its debts, it may want to turn to bankruptcy. Although there are a number of bankruptcy paths a business can take, many choose Chapter 11. This form of bankruptcy allows a business to reorganize, remain open, and pay off its creditors over time. In many cases, these struggling businesses find new investors who buy up the company and help pay off debt. Unfortunately, though, the plan doesn’t always work out.
Take, for instance, the case of electronics retailer HHGregg. This retailer recently announced that it would be liquidating all of its assets and closing all 220 stores after it was unable to find a buyer. The company’s CEO hoped that one of the 50 private equity firms and investors they met with would step in and buy the company, but their attempts proved fruitless. The CEO blames the tight timeline under the bankruptcy plan under which creditors must be paid back. The closings mark the end of 62 years in business.
As we’ve discussed previously on this blog, physical stores are struggling in the Internet era. Some may need to file for Chapter 11 bankruptcy, or Chapter 13, in hopes of obtaining manageable payments to creditors. In some instances, though, taking that step simply isn’t a reality. Under those circumstances, it might be necessary to convert a Chapter 11 or Chapter 13 filing into a Chapter 7 liquidation. Struggling businesses that want to learn more about the debt relief options available to them should consider discussing the matter with an experienced bankruptcy attorney.
Source: Fortune, “HHGregg Will Close All 220 of Its Stores After Failing to Find A Buyer,” Phil Wahba, April 7, 2017