Changing retail habits of Kentuckians and residents of nearby states appear to have claimed another victim: retail chain HHGregg. Gregg has been hoping to reorganize its debts under Chapter 11 of the Bankruptcy Code, but it is now facing the possibility that it will not find a buyer and that it will be forced to liquidate its business.
The chain is based in Indianapolis, but it has a number of stores in the Louisville area. The company has blamed its declining sales on its inability to keep up changing habits of its customers, the internet, and more aggressive marketing by other big box retailers. The company filed a petition for reorganization under Chapter 11 of the Bankruptcy Code on March 6, 2017. The company's original reorganization plan contemplated the sale of the business as a going concern. However, no willing buyer has come forward.
In a recent filing with the Securities and Exchange Commission, the company announced that it was preparing a plan of liquidation would result in the sale of all of the company's assets and the closing of all of its stores. The company said that it was retaining two firms that specialize in liquidating businesses. The company faces a self-imposed deadline of April 7 to find a buyer for the business. If no buyer is found, the chain will begin closing its stores on April 8. In this event, the chain will sell all inventory and its fixtures, furnishings and equipment.
The Gregg bankruptcy shows how a plan for reorganization can quickly become a plan for liquidation. Any business contemplating seeking protection from creditors under Chapter 11 may wish to consult an experienced bankruptcy lawyer for advice on whether Chapter 11 is the best remedy or whether a complete liquidation under Chapter 7 makes more sense.
Source: Indianapolis Business Journal, "Bankrupt HHGregg plans to liquidate if no buyer found in next week," Susan Orr, March 31, 2017