The Retail Industry
If anything is certain in the recent economic environment, it is that the retail industry feels the pain of a slow economy as much as, if not more than, any industry. High unemployment and low consumer confidence mean low revenues and tighter margins for retailers. Consumers are not willing to spend as freely as before. More expensive items are experiencing a longer shelf life and consumers are purchasing in smaller quantities. Retail outlets are being forced to increase budgets on advertisements while offering more sales and specials. This combination leads to strained budgets, decreased profit margins and increased stress on an already suffering business. When a retailer comes to the brink of insolvency and begins to consider seeking relief under the Bankruptcy Code, there are several issues that must be taken into consideration.
Retailers should consider that an attempt to reorganize debts under Chapter 11 of the Bankruptcy Code requires capital to continue business operations in the early stages of bankruptcy. Being able to plan a strategic time to file bankruptcy can be crucial to start a retailer’s bankruptcy case off on the right foot and raise the probability of a successful reorganization. Common administrative issues that arise when a bankruptcy petition has been filed including keeping the lights and other utilities turned on, dealing with unexpired leases, appeasing secured lenders up front in order to assure availability of inventory, customer loyalty and brand recognition during the bankruptcy proceedings.
After reviewing all options for retail owners and deciding on the best option DelCotto Law Group PLLC are willing to help and move forward with whatever proceedings are deemed necessary. Chapter 11 bankruptcy can be a critical tool to use in order to restructure debts or provide a sale of assets or wind down of operations. Our attorneys have extensive experience in the retail industry and can be of service in addressing bankruptcy issues such as:
- Lease Assumption, Rejection or Assignment
- True Lease/Finance Lease Analysis
- Critical Vendors
- Administrative Claims including 503(b)(9) claims
- Franchise or trademark Agreements
- 363 Sales and GOB sales
- Timing of filing/cyclical nature of business
- Gift card issues