The Covid-19 pandemic has upended society on a massive scale. The American economy has rapidly become a casualty of the pandemic, with major companies having to file for bankruptcy protection as a direct result of the pandemic. Bankruptcy is a legal process in which a company restructures its finances. While bankruptcy does not necessarily mean that a company is going out of business, that is certainly a possibility. What is indisputable, however, is that the company will undergo substantial changes, ranging from closing stores to complete liquidation of its inventory.
One of the hardest-hit sectors of the pandemic economy is the retail industry. Many physical stores had to shut down completely during quarantine, which greatly affected sales. As the economy reopens with social distancing guidelines in place, store capacity is limited, and many shoppers are simply staying home. Well-known department stores, including Neiman Marcus, JCPenney, and Lord & Taylor have filed for bankruptcy. Smaller clothing brands such as J.Crew, True Religion Apparel, Brooks Brothers, and the Ascena Retail Group (owner of brands such as Ann Taylor and Lane Bryant) have also sustained extreme monetary losses that have led to them filing for bankruptcy over the past few months.
Companies that cater to the entertainment and lifestyle sectors have also been heavily affected by the pandemic, primarily because people can no longer go out and enjoy activities as they used to. Social gatherings are generally discouraged during the COVID era. Both Gold’s Gym and 24 Hour Fitness have filed for bankruptcy protection. Cirque du Soleil, the Canadian acrobatics company, known for its action-packed shows, can no longer perform to an audience and had to file. Apex Parks, the owner of amusement and water parks across America, filed for Chapter 11. CMX Cinemas, a chain of movie theaters, also filed for bankruptcy in the Spring. Eateries such as California Pizza Kitchen and Le Pain Quotidien have not been spared during this crisis, and bankruptcy changes can be expected for them too.
Filing for bankruptcy is always a very serious matter. In the face of the overwhelming challenge of a global pandemic, however, it has proven to be the best choice for many companies hoping to endure the next few months and somehow survive and see their businesses thrive again in the future.