All the Retailers That Went Bankrupt in 2020

J.Crew

J.Crew Group Inc., which operates the J.Crew and Madewell brands, filed for Chapter 11 bankruptcy protection on May 4, 2020 in federal bankruptcy court for the Eastern District of Virginia — becoming the first major American retailer to go bankrupt amid the coronavirus pandemic. The retailer had been floundering for several years amid changing consumer preferences and the rise of digital.

In attempt to right the ship in about 2015, the apparel and accessories company took on a massive expansion project, aiming to cater to a more upscale audience. But the move was largely unsuccessful. In the years that followed, a new loyalty program, collection launches and the debut of a third-party marketplace were unable to return the retailer to its glory days. Plus, it was saddled with a hefty debt load of about $1.7 billion, which it had planned to trim by spinning off Madewell through an IPO — a plan that was put on hold in early March as the coronavirus crisis began mounting in the United States.

Stage Stores

After months of speculation pre-dating the coronavirus crisis, Stage Stores filed for Chapter 11 bankruptcy protection on May 11. The Texas-based company — which operates units under the Gordmans, Bealls and Goody’s banners as well as the Stage name — listed its estimated liabilities as being between $500 million and $1 billion, the same range as its estimated assets. Amid mounting struggles, the retailer had previously announced plans to reinvent itself through off-price, by transitioning its entire fleet to the Gordmans nameplate.

“Over the last several months, we had been taking significant steps to attempt to strengthen our financial position and find an independent path forward,” said Stage president and CEO Michael Glazer in a release. “However, the increasingly challenging market environment was exacerbated by the COVID-19 pandemic, which required us to temporarily close all of our stores and furlough the vast majority of our associates. Given these conditions, we have been unable to obtain necessary financing and have no choice but to take these actions.”

True Religion

On April 13, True Religion filed for Chapter 11 protection for the second time in less than three years. In a court filing, the denim-focused company listed the estimated value of its assets at $100 million to $500 million — the same estimated value of its liabilities. The retailer wrote in court documents that it “would have preferred to wait out the current instabilities of the financial markets and retail industry generally” but “simply could not afford to do so” due to the coronavirus crisis.

Founded in 2002, True Religion first filed for bankruptcy in 2017, coming out of Chapter 11 four months later. At the time, the retailer said it planned to expand its e-commerce globally as well as to increase its brand awareness and licensing. However, it was unable to steady itself following its reemergence: For the fiscal year ended Feb. 1, 2020, the company posted a net loss of $50 million on $259 million in net revenue. In addition, it reported total assets of about $208 million for that fiscal year, compared with $250 million in liabilities on a consolidated basis.

Neiman Marcus

After weeks of speculation, Neiman Marcus Group entered Chapter 11 bankruptcy on May 7, 2020. The retailer, which also owns Bergdorf Goodman, said that it had secured $675 million in financing from creditors to continue operations during the bankruptcy process. In a statement, NMG chairman Geoffroy van Raemdonck said the coronavirus “placed inexorable pressure” on the company, and that it had been making “solid progress” prior to the pandemic.

However, NMG had faced a series of challenges before COVID-19, among them a multi-billion dollar debt load stemming from its 2013 private equity buyout as well as declining foot traffic and increased digital competition. The chain was in 2019 able to rework some of its debt and avoid filing for bankruptcy, and it had looked into various strategies to raise capital, including the possible sale of its Mytheresa e-commerce business. 

Modell’s Sporting Goods

Modell’s Sporting Goods filed for Chapter 11 bankruptcy protection for New Jersey on March 11, citing a challenging retail environment. The family-owned business’ decision to file followed a series of financial difficulties in recent years.

Amid mounting challenges, CEO Mitchell Modell had loaned the company $6.7 million in 2019, and the retailer had sold its warehouse in Bronx, N.Y. to raise additional funds. What’s more, Modell’s chief had been mulling the sale of a minority stake in the business to an outside investor to help keep it afloat, and a WSJ report from February had indicated that the company had hired financial advisers. Plus, the sporting goods chain had stopped paying an unspecified number of landlords and vendors and had been negotiating with suppliers. The 130-year-old company has started liquidation sales at its stores, with plans to shutter over 130 outposts in the Northeast and mid-Atlantic. Its website is also offering steep discounts.

G-Star Raw

Sustainably minded denim company G-Star Raw Retail Inc. filed for Chapter 11 protection on July 3, 2020, citing financial woes stemming from the coronavirus pandemic. Prior to that the retailer had entered into voluntary administration in Australia, despite reportedly not experiencing any major debt.

Founded in 1989, G-Star has flagship stores in Paris, London, Milan and Shanghai, as well as 57 outlets in Australia and roughly 140 stores in the United States. The company’s largest creditor listed in its Chapter 11 filing was its landlord at 475 Fifth Avenue in New York, with an owed balance of $426,007. 

G-Star Raw’s Chapter 11 filing came the same day as fellow denim-focused retailer Lucky Brand, with True Religion having gone bankrupt several months earlier, in April. On the whole, the denim category has been hit hard by the coronavirus pandemic, as homebound individuals are swapping their jeans in favor of leggings and sweatpants.

JCPenney

On May 15, JCPenney filed for Chapter 11 protection in federal bankruptcy court for the Southern District of Texas. The retailer wrote in its filing that it had $500 million of cash on hand and had received debtor-in-possession financing commitments of $900 million.

The department store chain had struggled for several years in the face of declining sales, heightened digital competition and numerous leadership changes. Under the helm of CEO Jill Soltau, who took over in October 2018, JCPenney had shuttered underperforming stores and brought in new talent in hopes of reviving its business. As part of its turnaround plan, JCPenney hired debt restructuring advisers in July 2019, and it experimented with new strategies such as joining the outdoor and consignment markets as well as launching a curbside pickup program. However, investors had largely given up on the retailer, pushing its stock below $1 and putting it at risk of being delisted from the New York Stock Exchange.

Lucky Brand

On July 3, 2020, Lucky Brand announced that it had filed for Chapter 11 protection in federal bankruptcy court for Delaware, with the coronavirus pandemic having “severely impacted sales across all channels.” The denim-focused brand said that it had entered into a stalking-horse asset purchase agreement with SPARC Group LLC, the operator of brands such as Aéropostale and Nautica, for the sale of substantially all of its operating assets. Additionally, Lucky Brand said that a newly formed subsidiary of Authentic Brands Group LLC, ABG-Lucky LLC, would acquire its intellectual property assets. The Los Angeles-based company stated that it plans to “continue to explore potential sale transactions with other parties to achieve the highest or otherwise best offer” throughout the Chapter 11 process. In addition, the retailer, which operates over 100 stores in North America, said that it will remain operational during Chapter 11 proceedings, with the majority of its physical stores having reopened following coronavirus-induced closures.

Aldo

Aldo Group Inc. announced on May 7 that it had sought and obtained an initial order pursuant to the Companies’ Creditors Arrangement Act from the Superior Court of Québec, as well as  “voluntarily” filed for “similar protection” — Chapter 15 bankruptcy — in the U.S. Founded in 1972 and based in Montreal, the retailer had been forced to shutter its stores for several months amid the coronavirus outbreak. It has begun to reopen doors, with its Aldo, Call It Spring and Globo e-commerce sites to remain functional during the restructuring process.

“With our deep fashion footwear heritage, experienced leadership team, extensive omnichannel capabilities and loyal customer base, we firmly believe that we will emerge from the restructuring process and from the challenges posed by the COVID-19 pandemic. We will come out stronger and well-positioned to continue leading the way in fashion retail,” Aldo Group CEO David Bensadoun said in a release.

Brooks Brothers

Brooks Brothers filed for Chapter 11 protection in United States Bankruptcy Court for the District of Delaware on July 8, 2020.

According to a statement from the company, Brooks Brothers elected to file for Chapter 11 protection to secure additional financing as well as to. “facilitate a sale process in an efficient manner.” It has secured $75 million in debtor-in-possession financing from brand management firm WHP Global as well as a $20 million loan from investment firm Gordon Brothers. 

“Over the past year, Brooks Brothers’ board, leadership team, and financial and legal advisors have been evaluating various strategic options to position the company for future success, including a potential sale of the business,” a Brooks Brothers spokesperson told FN. “During this strategic review, COVID-19 became immensely disruptive and took a toll on our business.”

Founded in 1818 as a family business and owned by Italian billionaire Claudio Del Vecchio, the retailer has more than 500 stores around the world, as well as partnerships with wholesalers such as Nordstrom and Macy’s.

John Varvatos

On May 6, John Varvatos Enterprises Inc. filed for Chapter 11 protection in U.S. bankruptcy court in Delaware. The New York-based menswear company listed assets of up to $50 million and liabilities of $100 million or more, saying in a statement that it had been “greatly impacted by the negative effects of the coronavirus pandemic.”

“We have taken decisive action to respond to the challenges that all retailers face in the present environment and we remain extremely confident that our brand, celebrating its 20th year in business, will emerge even stronger. We have a passionate team, a fierce global consumer following and a commitment to our customers, whom we expect to serve for many years to come,” said the company’s namesake found John Varvatos in a statement.

Through the restructuring, the company said it planned to sell its business to existing investor Lion Capital LLP, pending approval from the court.