(This article appeared on June 18, 2020)
From iconic stores to famous chain restaurants, a growing number of beloved brands are filing for bankruptcy, shifting their focus to e-commerce, or shutting down operations entirely as they face unprecedented financial stress
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Days after furloughing many of its 14,000 employees, Neiman Marcus officially announced its decision to file for bankruptcy on May 7, according to NBC News.
The company operates 43 Neiman Marcus stores, 22 Last Call stores and two Bergdorf Goodman stores and has aborrowings total of about $4.8 billion, according to credit rating firm Standard & Poor’s. Some of that debt is left over from its $6 billion buyout in 2013 by its owners, private equity firm Ares Management Corp and Canada Pension Plan Investment Board.
In an official statement, chairman and CEO Geoffroy van Raemdonck said, “Like most businesses today, we are facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business.”
van Raemdonck continued, “We will emerge a far stronger company. In a world that is changing, we are uniquely positioned to give our brand partners access to our loyal luxury customers like no other company.”
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J.Crew Group lenders agreed to convert the company’s estimated $1.65 billion of debt into stock. According to several reports, the company (which also operates sister brand Madewell) will continue e-commerce sales and hopes to reopen stores when social distancing restrictions are lifted.
“We will continue all day-to-day operations,” J.Crew Group CEO Jan Singer said in a statement, according to CNN.
J.Crew declined PEOPLE’s request for comment.
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Diane von Fürstenberg
Prolific designer Diane von Fürstenberg’s fashion empire is shrinking significantly. The New York-based label laid off 75 percent of its 400-person staff, and is set to close 18 of its 19 retail stores. Its new focus will be centered on a “digital-only, China-focused” business model, according to Business of Fashion‘s latest report published on June 15.
The news comes after several rounds of restructuring within the company and years of declining sales. The DVF store in New York City’s Meatpacking District (which also holds the company’s office and a living space for von Fürstenberg) is the only location that will remain open.
The designer, 73, gained national success in 1972 thanks to her invention of the sought-after wrap dress. The brand went on to flourish and von Fürstenberg quickly became a household name.
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On April 13, the designer denim brand filed for Chapter 11 bankruptcy protection for the second time in three years, according to a report from Forbes.
“While the debtors would have preferred to wait-out the current instabilities of the financial markets and retail industry generally, they simply could not afford to do so,” according to court documents obtained by Forbes, which noted that store closures caused by coronavirus accelerated the company’s problems.
True Religion previously filed for bankruptcy in 2017 and exited in four months after it invested in its e-commerce business, closed stores and slashed its more than $350 million of debt.
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24 Hour Fitness
The fitness chain, which closed its gyms in March due to the ongoing pandemic, announced on June 15 that it was “implementing a financial restructuring, through a voluntary Chapter 11 filing.”
“This process gives us the opportunity to reposition 24 Hour Fitness by eliminating debt and closing clubs that were either out-of-date or in close proximity with other 24 Hour Fitness clubs,” the company wrote in a statement shared on its website.
“If it were not for COVID-19 and its devastating effects, we would not be filing for Chapter 11,” CEO Tony Ueber said in a statement, while maintaining hope about the company’s future. “We expect to have substantial financing with a path to restructuring our balance sheet and operations to ensure a resilient future. The COVID-19 environment has proved that attention to health and fitness are more important now than ever before.”
Although the company still plans to reopen many clubs across the county by the end of June, it will also permanently close over 130 gyms.The majority of the gyms affected by the closures are in California and Texas.
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Chuck E. Cheese
The show may not go on for Chuck E. Cheese after COVID-19. The brand behind the popular kid’s restaurant, CEC Entertainment, is nearly $1 billion in debt and is looking for a $200 million loan to keep the business afloat, according to the Wall Street Journal.
The Texas-based chain currently operates 610 locations in 47 states but had to close its stores when the pandemic struck, making it extremely difficult for the company to raise capital.
In April, the brand said they were considering refinancing, bankruptcy and restructuring after the pandemic began to cause strain on the restaurant industry, the WSJ reported.
According toThe Takeout, some 17,000 workers were laid off in March. In an attempt to make money (and keep on some employees) during the pandemic, the store masqueraded as Pasqually’s Pizza and Wings on delivery apps, a reference to one of Chuck E. Cheese’s bandmates.
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Pier 1 Imports
After its “orderly wind down” of its retail operations, the home decor company, which had previously filed for bankruptcy in February, intends to sell off its remaining assets in a “court-supervised” process.
“This decision follows months of working to identify a buyer who would continue to operate our business going forward,” Robert Riesbeck, Pier 1’s CEO and CFO, said in the statement.” Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of COVID-19, hindering our ability to secure such a buyer and requiring us to wind down.”
While their brick-and-mortar stores are gone, the company is “currently continuing to serve customers through Pier1.com, and orders are being processed and filled,” the company said in its statement.
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The department store chain announced on May 15 that it filed for Chapter 11 bankruptcy protection from its creditors as part of a restructuring plan that would eliminate “several billion dollars of indebtedness” and “provide increased financial flexibility to help navigate” the health crisis. The company also said that it plans to close stores, but did not disclose specific locations or timing.
J.C. Penney had been struggling with declining sales for years after hedge fund manager Bill Ackman, who was ousted in 2013, attempted to rebrand the retailer into a collection of boutiques, according to the New York Times.
CEO Jill Soltau said the company had been making “significant progress” in restoring financial strength before the coronavirus outbreak, but the temporary closure of J.C. Penney stores nationwide “necessitated a more fulsome review to include the elimination of outstanding debt.”
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Souplantation & Sweet Tomatoes
The buffet chains’ parent company Garden Fresh Restaurants has decided to permanently shutter all 97 locations of Souplantation — also known as Sweet Tomatoes outside of Southern California — and lay off its workforce, CEO John Haywood confirmed to the San Diego Union-Tribune on May 7.
“The FDA had previously put out recommendations that included discontinuing self-serve stations, like self-serve beverages in fast food, but they specifically talked about salad bars and buffets,” Haywood said. “The regulations are understandable, but unfortunately, it makes it very difficult to reopen. And I’m not sure the health departments are ever going to allow it.”
According to the outlet, 4,400 employees will be affected by permanent closure.
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Le Pain Quotidien
The fast-casual bakery chain announced it would close all 98 of its U.S. locations after filing for Chapter 11 bankruptcy protection in May. However, at least 35 stores will potentially be reopened at a future date following a partial buyout by Aurify Brands.