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Retail Industry Bankruptcy & Restructuring Toolkit
Practical Law Toolkit w-003-1097 (Approx. 9 pages)
Retail Industry Bankruptcy & Restructuring Toolkit
by Practical Law Bankruptcy & Restructuring
| Maintained • USA (National/Federal) |
Resources addressing strategies, challenges, and in-depth analysis of issues involving the representation of debtors and creditors in retail business bankruptcy proceedings.
Shifts in consumer shopping habits, the continued growth of e-commerce, and the COVID-19 pandemic have left retail chains financially unstable, forcing many brick-and-mortar retail chains to file for bankruptcy to restructure or close their doors. Due to market factors and certain Bankruptcy Code provisions and requirements, retail debtors and creditors face challenges that are unique to retail Chapter 11 proceedings, including:
- An inability to replenish inventory due to a lack of DIP financing.
- Large administrative claims from vendors that shipped goods within 20 days of the petition date (§ 503(b)(9), Bankruptcy Code).
- Strict time limits to reject or assume executory contracts and unexpired leases (§ 365(d)(4), Bankruptcy Code).
- Reclamation claims and adjusted payment and credit terms.
- Pressure from prepetition lenders to liquidate or sell inventory to maximize value.
Experts continue to believe that the retail industry will continue to accumulate substantial financial losses because of:
- Changing market trends.
- Shifting consumer sales from traditional retailers to a proliferation of online resellers.
- Increased competition from other full-line and specialty retailers.
These elements will likely lead more retailers to seek Chapter 11 relief to liquidate, reorganize, or sell their assets through a section 363 sale.
This Toolkit contains continuously maintained practice notes, standard clauses, standard documents, checklists, and toolkits to help debtors and creditors develop strategies both before and during a retail business's bankruptcy proceedings.