One clothing retailer with a presence in Northern Kentucky announced that it had successfully completed a Chapter 11 bankruptcy reorganization plan and was looking forward to a more profitable future. The end of the bankruptcy did not come without some cost to the chain, as it was forced to close down 100 stores nationwide and reduce its corporate staff. Moreover, there were some shifts in management that apparently came at the urging of the store’s creditors, which ultimately signed off on the store’s reorganization.
As with any Chapter 11, the goal of this reorganization is get the retail chain back into an economic position in which it can be competitive in an increasingly tight retail market, and thus turn a profit. While the store’s ultimate future is uncertain, especially in the wake of the failures of several other retail outlets, the fact that it was able to emerge successfully from Chapter 11 at all is itself a promising short-term sign.
This case illustrates how a Chapter 11 can be helpful to Kentucky businesses that have fallen on hard economic times. The fact that a business isn’t doing well is not always so much a case of bad management as it is a case of changed economic circumstances or even an unexpected turn of events.
With the right reorganization plan and a little bit of sacrifice, a business may be able to regain its financial health. However, coming up with a reorganization plan in a Chapter 11 bankruptcy that is both feasible and acceptable to a company’s creditors can be complicated and take a lot of both legal skill and negotiation experience.
Source: WHIO, “Charming Charlie emerges from bankruptcy, but there’s a catch,” Kara Driscoll, April 26, 2018