6 companies filed for bankruptcy in May

By
Rex Rose
6 companies filed for bankruptcy in May

Retailers were already struggling and are now supporting the weight of the impact of the coronavirus. But a major gym brand and a major car rental company recently filed for bankruptcy.

Filing for bankruptcy does not necessarily mean that a company will go out of business. Many use bankruptcy to lose debt and other liabilities while closing unprofitable transactions in the hope of emerging leaner and stronger. Many of these companies have continued to record record profits, including the automaker General engines (GM)and many airlines in the nation.

However, many other brands that filed for bankruptcy with the intention of staying in business have not survived. Here are some U.S. companies that applied in May:

Gold’s Gym stated in its May 5 adventure that the virus hit it “in depth and in many ways”, which includes temporary closings of many of its 700 global gyms.

The bankruptcy protection filing of Chapter 11 will help him “emerge stronger and ready to grow,” the statement continued.

The 55-year-old company plans to go out of bankruptcy by August and has declared that “it will not go anywhere”. Gold triggered 30 positions in April, but does not intend to permanently close other gyms.

Hertz

Car rental giant Hertz (HTZ) filed for bankruptcy on May 22. The company also rents cars under the Dollar, Thrifty and Firefly brands.

The company has been in business since 1918, when it opened a shop with a dozen Ford Model Ts. Hertz survived the Great Depression, the near-total setback of American car production in World War II and the numerous oil price shocks.

By filing for bankruptcy, the car rental company claims that it intends to remain in business while reorganizing its debts so that it can emerge financially healthier.

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“The impact of Covid-19 on travel demand has been sudden and dramatic, causing a sharp drop in the company’s revenue and future bookings,” the company said in a statement, noting that “uncertainty remains as to when Revenue will return and when the automotive market reopens completely for sales, which made today’s action necessary. “

Hertz was criticized for paying millions of dollars in bonuses to its executives shortly before his bankruptcy – and a month later he started laying off thousands of employees.

On May 19, he paid a total of $ 16.2 million to 340 executives as part of a plan to keep them in place as the company attempts to reorganize itself, according to a filing with the Securities and Exchange Commission.

JCPenney

Coronavirus could be the latest blow to JCPenney, a 118-year-old department store. He was already struggling to overcome a decade of bad decisions, executive instability and harmful market trends.

JCPenney (JCP) filed for bankruptcy on May 15. The company has an agreement with most of its lenders that will allow it to attempt a turnaround plan to stay in business.
But it will close 30%, or about 200, of its 846 US stores. The company did not say how many of its 85,000 employees would lose their jobs due to permanent shop closings.

“Until this pandemic hit, we had made significant progress in rebuilding our company,” said CEO Jill Soltau, adding that the company’s efforts “had already begun to pay off.”

But JCPenney’s problems date back long before the pandemic, with the company having been hit by a decade of bad decisions. His last profitable year was 2010 and his net losses have since been $ 4.5 billion.
And the entire department store sector has suffered as more and more consumers shop online. Like big box discounters Walmart (WMT), Target (TGT) is Costco (COST) they also proved to be competitive, offering buyers lower prices and a selection of items not found in department stores, such as shopping.

J.Crew Group

It’s a distinction nobody wants: J. Crew Group became the first American national retailer to file for bankruptcy protection as the coronavirus pandemic forced a wave of store closures. It was filed on May 4th.

The company, which owns the preppy brands J.Crew and Madewell, plans to remain in business and emerge from bankruptcy as a profitable company. And Madewell, the fast-growing denim brand that had been scheduled for an IPO, will remain part of the business.

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The J.Crew group has been saddled with a heavy debt load since its purchase in 2011 from private equity firms TPG Capital and Leonard Green & Partners in a $ 3 billion deal.

It had grown rapidly in the nine years since the transaction was completed, almost doubling the number of stores. But he has also accumulated many more debts. He had a long-term debt of $ 50 million in his books in 2010, before the deal was announced – and by February of this year that number had risen to $ 1.7 billion.

The company operates nearly 500 stores, including J.Crew outlets.

Neiman Marcus

Luxury retailer Neiman Marcus, who filed for bankruptcy on May 7, said the restructuring deal with creditors will allow it to “substantially reduce its debt and position the company for long-term growth.”

The company’s history dates back 113 years to its first store in Dallas, which is still its home base. The company also manages the Bergdorf Goodman and Last Call chains.

Neiman had 69 stores among the three brands of last year. In March, a few days before the pandemic caused the closure of department stores, the company announced its intention to permanently close the “majority” of its 22 Last Call stores.

The fate of ITS was most likely sealed in 2013 when Ares Management and the Canada Pension Plan Investment Board paid $ 6 billion in a leveraged purchase, making the company private.

“The big problem with Neiman is that the [private equity companies] he paid too much and accumulated too many debts, “retail consultant and former Neiman executive told Steve CNN Business.

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Tuesday morning

Discounts for homeware retailer Tuesday morning (TUES) blamed the virus for prolonged shutdown of the store which caused an “insurmountable financial hurdle”.

CEO Steve Becker said the business was thriving before the pandemic. But the consequent temporary shop closings and employee employees had “serious consequences for our business.”

“The complete disruption of the store’s operations for two months puts the company in a financial position that can only be effectively addressed through a reorganization in Chapter 11,” he said in a statement.

The Dallas-based chain, filed on May 27, said it will permanently close approximately 230 of its nearly 700 stores in the United States.

–CNN Business’ Chris Isidore and Nathaniel Meyersohn contributed to this report.

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