Both individuals and companies have the option of filing for bankruptcy protection when their debts become overwhelming. Nowadays, more and more U.S. companies have had to file for bankruptcy due to major changes in the marketplace. David's Bridal, the largest bridal retailer in the country, recently filed for Chapter 11 bankruptcy protection.
The company, which was acquired by Clayton, Dubilier & Rice for over $1 billion in 2012, has been struggling due to the increase in online bridal retailers and non-bridal retailers such as H&M. The company has also struggled due to the fact that couples nowadays are marrying later in life and spending less on weddings in general. The company apparently has been slow to adapt to the idea that more people are choosing to wear informal dresses that they can wear again over traditional bridal gowns that can only be worn once.
Unlike Chapter 7 bankruptcy, Chapter 11 bankruptcy does not necessarily require that the individual or business to surrender their assets. Instead, Chapter 11 bankruptcy allows companies to stay in business while reorganizing and working to pay back their creditors. While never easy to move through such a process, this type of bankruptcy can ultimately be beneficial to a business.
While filing for Chapter 11 bankruptcy, David's Bridal entered a restructuring deal that eliminated $400 million from its $750 million debt. More than 300 store locations in the U.S. will remain open and existing orders and bridal appointments will not be impacted. By filing for this type of bankruptcy, the company can hopefully continue to be a part of the market and increase profitability.