In 2019, large companies like Forever 21, Avenue, Destination Maternity, Freds, Charming Charlie, Payless ShoeSource, Things Remembered, Charlotte Russe and Gymboree all filed for bankruptcy. And while Chapter 11 bankruptcy by itself doesnt mean that a company will close, many retailers do.

This year there has been no shortage of large chains filing for Chapter 11 bankruptcy hoping to restructure without closing. And with the impact of COVID-19, it almost feels like every week if not more another major retailer or other major company files for bankruptcy.

Chapter 11 bankruptcy provides the businesses or large investors with protection from creditors while they continue operating and develop a repayment plan. Both creditors and owners must agree on a reorganization plan, which ultimately must be approved by a federal bankruptcy judge.

Here are 16 large companies, most of which have locations in the midstate that have filed for Chapter 11 bankruptcy this year.

One of Destiny USA's original businesses that opened when Carousel Mall opened in October 1990. Justice opened in Carousel as Limited Too. The store is seen here in 2016. (Photo by Sarah Moses Buckshot, Syracuse.com)Sarah Moses Buckshot | syracuse.com

Ascena Retail Group - Ann Taylor, Catherines, Loft, Lane Bryant and Justice

On July 23, the Ascena Retail Group, the owner of Ann Taylor, Catherines, Loft, Lane Bryant, Justice and Lou & Grey, filed for Chapter 11 bankruptcy in the United States Bankruptcy Court for the Eastern District of Virginia. The company also owned the Dress Barn and closed all of the Dress Barn stores last year. In July, the company said it would reduce its footprint with the closing of a significant number of Justice stores and a select number of Ann Taylor, Loft, Lane Bryant and Lou & Grey stores including the exit of all stores across brands in Canada, Puerto Rico and Mexico and the closure of all Catherines stores.

And among the closings in the midstate for girls clothing retailer, Justice include store closures at the Capital City Mall in Lower Allen Township; The Outlet Shoppes at Gettysburg in Mount Joy Township, Adams County; the Park City Center in Lancaster; at Tanger Outlets Lancaster in East Lampeter Township, Lancaster County and at 2819 Concord Road in Springettsbury Township, York County, according to USA Today. The Justice store at Tanger Outlets Hershey will remain open.

The only Catherines store in the midstate is located at the Paxton Towne Centre at 5125 Jonestown Road in Lower Paxton Township. There are also stores in the Easton, Monroeville, Pottstown, Springfield, Whitehall and Wilkes-Barre areas as well as three in the Pittsburgh area. Those stores are all closing.

Ann Taylor has 13 stores in Pennsylvania, six of which are factory stores including stores in the Hershey and Lancaster areas.

Loft has 35 stores in Pennsylvania including stores in the Harrisburg, Lancaster and York area. Of the 35 stores, eight are factory stores including stores in the Hershey and Lancaster areas.

There are Lane Bryant stores in the Harrisburg, Hershey, Mechanicsburg, York, Lancaster and Gettysburg areas.

These Lane Bryant stores in Pennsylvania are closing, according to the USA Today.

The New York & Company store at the Destiny USA mall in Syracuse is closing after the clothing retailer filed for Chapter 11 bankruptcy protection July 13, 2020. (Rick Moriarty | rmoriarty@syracuse.com)Rick Moriarty | rmoriarty@syracuse.com

Retailwinds - New York & Company

On July 13, Retailwinds, the owner of New York & Company, Fashion to Figure, and Happy x Nature, filed for Chapter 11 Bankruptcy in the United States Bankruptcy Court for the District of New Jersey. The Company will close all of its stores, according to Footwearnews.com. New York & Company stores at the Harrisburg Mall in Swatara Township, the Capital City Mall in Lower Allen Township and at the Shoppes at Susquehanna Marketplace in Susquehanna Township are the stores the company has in the Harrisburg area.

In this Aug. 4, 2011, file photo, a man passes a Brooks Brothers store on Church Street in New York's financial district. The 200-year-old fashion retailer that says it's put 40 U.S. presidents in its suits, is filing for bankruptcy protection on Wednesday, July 8, 2020. (AP Photo/Mark Lennihan, File)AP

Brooks Brothers

Last month, Brooks Brothers filed for Chapter 11 Bankruptcy, according to Market Watch. The company said it would close about 51 stores. Locations were not announced, but most of the closures have reportedly already begun with inventory moving from targeted stores to distribution centers; eight stores were permanently closed last month, including in NYC, Boston and Washington, D.C., according to Business Insider. Brooks Brothers has more than 500 stores worldwide and 4,025 employees, including an outlet store at Tanger Outlets Lancaster. The Brooks Brothers store at the Outlet Shoppes at Gettysburg has permanently closed, according to the company website.

GNC (Shutterstock)

GNC

GNC filed for Chapter 11 bankruptcy on June 23. Over the past year, GNC has been closing underperforming stores. GNC expects to accelerate the closure of at least 800 to 1,200 stores. As of March 31, 2020, GNC had approximately 7,300 locations, of which approximately 5,200 retail locations are in the United States (including approximately 1,600 Rite Aid store-within-a-store locations).

The stores that GNC has announced that it is closing in Pennsylvania include:

Tuesday Morning opened in June, 2019 at 5098 Jonestown Road in the Colonial Commons shopping center. Businesses along Jonestown Road/Allentown Boulevard.July 24, 2019. Dan Gleiter | dgleiter@pennlive.com

Tuesday Morning

Discount retailer, Tuesday Morning filed for Chapter 11 bankruptcy in May and blamed it on COVID-19.

The prolonged and unexpected closures of our stores in response to COVID-19 has had severe consequences on our business, CEO Steve Becker said in a statement.

The company at the time said it expected to permanently shutter 230 of its 687 locations and said it would be closing underperforming stores over the summer. The stores to close include those at the Carpet Mart Plaza in Hampden Township and Colonial Commons shopping center in Lower Paxton Township, according to a list published by CNBC. Tuesday Morning stores in other parts of Pa. are also on the list, including Wilkes-Barre, Pittsburgh and Quakertown.

The JCPenney at Capital City Mall in Camp Hill, PA on June 12, 2020.Dan Gleiter | dgleiter@pennlive.com

JCPenney

JCPenney filed for Chapter 11 bankruptcy in May. The company said at the time it expected to close 192 locations by February 2021 and 50 more would close in its 2022 fiscal year. In June it announced the locations of 151 of those stores including four in Pennsylvania:

Star-Ledger photo by (Jerry McCrea) Short Hills 6-20-95) The Neiman Marcus logo on the exterior wall of the store in Short Hills. Jerry McCrea

Neiman Marcus

Luxury retailer, Neiman Marcus filed for Chapter 11 bankruptcy in May. The retailer has commenced voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the Southern District of Texas in the Houston division. The company will continue operations and says it expects to emerge from the bankruptcy process in the early fall. There is a Neiman Marcus store at the King of Prussia Mall.

A woman walks past a J. Crew retail store in Baltimore in 2013. (AP Photo/Patrick Semansky)

J. Crew

J. Crew filed for Chapter 11 Bankruptcy in May.

Modell's Sporting Goods (Photo by Michael Mancuso, NJ.com)TT Michael Mancuso | For NJ.com

Modells Sporting Goods

Modells Sporting Goods filed for Chapter 11 Bankruptcy protection in March and said it was closing all of it stores, according to Bloomberg. The family-owned business chain had 153 stores in New York, New Jersey, Pennsylvania, Connecticut, Rhode Island, Massachusetts, New Hampshire, Delaware, Maryland, Virginia and Washington D.C., according to a report by Bloomberg.

Loves Furniture Inc. announced they have acquired the inventory and assets of 27 former Art Van Furniture, Levin Furniture and Wolf Furniture stores in five states, 17 of which are in Michigan. (MLive file photo)Sarahbeth Maney | MLive.com

Art Van Furniture/Wolf Furniture

AVF Holdings Inc. announced in March that it had made the decision to wind down operations and begin liquidation sales at all of its company owned stores in Michigan, Illinois, Indiana, Missouri, and Ohio. The company operates under the brands Art Van Furniture, Art Van PureSleep and Scott Shuptrine Interiors. The company announced on March 6 that Levin Furniture and Wolf Furniture in Ohio and Pennsylvania would be sold to Robert Levin, pending court approval. Eight Wolf Furniture stores in Maryland and Virginia would also be liquidated. Two weeks later Art Van Furniture said it would not sell the eight stores to Robert Levin. In July Robert Levin announced that Levin Furniture would reopen 17 stores in Pittsburgh and Cleveland.

Pier 1 Imports is closing its store in Camp Hill. (Daniel Urie, PennLive)

Pier 1 Imports

Pier 1 Imports announced in February that it filed for Chapter 11 bankruptcy and announced it was closing more than 400 stores including its store on Jonestown Road in Lower Paxton Township. But, in May it announced it was closing its remaining 540 stores including its store in Camp Hill.

Gold's Gym at Phillipsburg Mall announced Monday, Sept. 30, 2019 it would be closing its doors for good. It encouraged members to go to the franchise's Hackettstown location. (Pamela Sroka-Holzmann, Lehighvalleylive.com)

Golds Gym

Golds Gym announced in May that it was filing for Chapter 11 Bankruptcy and said it would close about 30 company owned stores. None of the company-owned stores are in Pennsylvania, Adam Zeitsiff, president and CEO of Golds Gym confirmed to PennLive in June.

JoS. A. Bank location in Arborland Center at 3783 Washtenaw Avenue (MLive file photo)AnnArbor.com

Tailored Brands - Mens Wearhouse, Jos. A. Bank, Moores Clothing for Men and K&G

Tailored Brands filed for Chapter 11 bankruptcy on August 2. In July it said it would close more than 500 stores. As of Aug. 3, the company had announced only one store closing in Pennsylvania, a Jos. A. Bank store in Philadelphia, according to USA Today.

A Wendy's fast food restaurant opened on July 1, 2020, in Palmer Township near the Route 33 interchange. (Rudy Miller, Lehighvalleylive.com)Rudy Miller | For lehighvalleylive.com

NPC International - owner of hundreds of Wendys and Pizza Hut franchises

This summer, Kansas-based NPC International, which owns hundreds of Pizza Hut and Wendys franchises, including numerous Wendys locations in the Harrisburg area, filed for Chapter 11 bankruptcy. The company has 39 Wendys location within 40 miles of Harrisburg, including multiple locations on the East shore and the West Shore, according to its website. NPC currently operates more than 1,225 Pizza Hut units in 27 states and more than 385 Wendys units in eight states.

JOHN C. WHITEHEAD/The Patriot-News THE PATRIOT-NEWSTHE PATRIOT-NEWS

Chuck E. Cheese

CEC Entertainment, the parent company of Chuck E. Cheese and Peter Piper Pizza filed for Chapter 11 bankruptcy on June 24. As of that date there were 266 company-operated Chuck E Cheese and Peter Piper Pizza restaurant and arcade venues.

In this Friday, Dec. 7, 2018, photo, a Hertz "Fast Lane" sign directs rental car drivers to a biometric scanning machine at Hartsfield-Jackson Atlanta International Airport, in Atlanta. (AP Photo/Jeff Martin)AP

Hertz

Hertz Global Holdings Inc. filed for Chapter 11 bankruptcy on May 22.

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JCPenney, Pier 1 Imports, Chuck E. Cheese and 13 other chains that have filed for bankruptcy this year - PennLive

Fewer Wisconsin farms filed for bankruptcy this spring, despite low commodity prices and supply chain problems caused by the COVID-19 pandemic.

Over the last year, both of the state's federal court districts had more Chapter 12 bankruptcies, which are used by family farmers or fishermen, compared tothe same period in 2019.

There were 45 Chapter 12 filings in the Western District of Wisconsin during the 12-month period ending June 30. Thats up from the same period last year, when 32 farms filed for bankruptcy.

In the Eastern District, there were 24filings over the last year, compared to 13 filings in 2019.

But the number of farm bankruptcies filed during the second quarter of 2020 was lower than the same period last year, following a national trend.

The data shows the Western District had 7 Chapter 12 filings during the second quarter, compared to 10 filings in spring 2019.Only one farm filed for bankruptcy in the Eastern District during the quarter, down from five Chapter 12 filings last year.

Christopher Seelen is an attorney based in Eau Claire who represents creditors in bankruptcy court. Hesaid Gov. Tony Evers 60-day moratorium on new foreclosures allowed some farms to put off filing for Chapter 12 bankruptcy, which is used to restructure debts.

He said some farms also received an influx of cash from the federal governments coronavirus relief programs.

"In general during the lockdown, I think people were less interested in leaving their houses and visiting an attorney. And some of the bankruptcy firms werent taking in-person meetings anyway,"Seelen said. "I think the lenders were doing their best to work with debtors in these unprecedented times to try to forbear and help the farmers along as best they could. But at some point, all of those things are going to come to an end."

Seelen said many bankruptcy attorneys are preparing for a spike in filings at the end of this year, both from farms that put off filingearlier in the year and new farms struggling under continued low commodity prices.

He points out that the Western District of Wisconsin has had some of the highest numbers of farm bankruptcies in the country for several years.

"When youve had that many farm bankruptcies, it's difficult to think that they would increase beyond that," Seelen said."But certainly theyre going to be steady and if they do increase a little bit over the last 6 months, I think you're catching those farmers that maybe didn't have to file 6 months ago."

Seelen cautions that looking at bankruptcy numbers is only one part of the farm sector thats struggling.

"Chapter 12 is only for those farmers that want to try to continue with their business, try to reorganize," he said. "Certainly, there's probably a lot more farmers that just file the Chapter 7 liquidation bankruptcy or maybe just threw the keys and the equipment and the cattle back to the lender and just walked away."

Steve Deller, agricultural and applied economics professor at the University of Wisconsin-Madison, said he agrees that the high number of Chapter 12 filings will likely continue this year.

But he said many farms were in a better financial position before the pandemic because of price improvements at the end of 2019.

"If (the pandemic) had hit two years ago, I think we would see a lot higher farm bankruptcy rates. But we did have a short period of recovery, taking some of the pressure off of farms,"Deller said.

He said farms continue to make a choice between increasing production to minimize cost or choosing to down-size to smaller markets.

"Farmers are making the decision that at this kind of middle-size operation, we can't really make a go of it,"Deller said. "Either we keep farming and we have to go bigger or we kind of shift and go a little bit smaller to cut our costs. Were still in farming but that's not our primary source of family income."

Deller said the pandemic has brought more attention to the countrys reliance on large farms and processors, especially in the meat industry. He said there could be new opportunities to grow local meat processing capacity for small farms in response.

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Fewer Wisconsin Farms Filed For Bankruptcy During the Height Of The Pandemic - Wisconsin Public Radio News

British actor Laurence Olivier and American Dustin Hoffman on the set of Marathon Man, directed by ... [+] John Schlesinger. (Photo by Paramount Pictures/Sunset Boulevard/Corbis via Getty Images)

The coach said no-pain no-gain, which aligns with the current thinking on Fashion Avenue these days. Announcements of retail bankruptcies pop up daily - there is little explanation, and no end in sight.

To experience financial pain without a proper coach is not advisable. Solid planning and strategy help navigate the issues of the moment and they also align your business to a better path. Enter New Yorks prestigious consulting firm MMG Advisors, one of the industrys premier sources for intelligent financial information during these difficult times for fashion brands and retailers.

Truth be told, when discussing the word uncomfortable, dental chairs in Manhattans garment district know the secrets. Perhaps it is the threat of pain that encourages patients to spill proprietary beans, when the dentist says: Hows your retail business - are you safe from bankruptcy?

Hoping that you have chosen the right path for your issue of the moment; attention turns to the dentist. I understand that you are here for a routine exam, but there is a problem. Your tooth is cracked. We should yank that tooth. You will wait a few weeks, there will probably be a bone graft, and then an implant. Are you ready?

As the words spill from the dentists lips, fear turns to horror. Your stomach churns, you are immediately spun into a new and confusing web when ironic as it may seem, all you wanted was an dental exam and a cleaning. Strange thoughts circulate. A vision of Dustin Hoffman suddenly appears in the dental chair (Marathon Man?) How will this end? Can the dentist be trusted? How did I get in this situation in the first place?

Eventually, the vision clears, fear subsides, and the conversation turns back to getting proper advice. The dental experience parallels the complex web of bankruptcy. To avoid unnecessary pain, it is best to work with experts like the fashion industrys 30-year old investment bank, MMG Advisors. Truth be told, MMG knows, understands, and has experienced all types of financial issues, and they work with clients to anticipate appropriate steps - so that all the parties can navigate this difficult terrain. MMG, like the dental chair, hears the industry secrets.

Led by former retail executives with decades of combined operational experience, MMG Advisors understands how to leverage consolidation opportunities. The team finds solutions for companies requiring either an in-court or out-of-court process whether for M&A or for raising capital. Bankruptcy for any retailer may not be the only solution in todays complex world, but in our COVID-19 environment, it has become the fashionable way to ease the pain.

MMG Managing Director Mary Ann Domuracki indicates that (as a process) developing a restructuring plan requires careful up-front consideration from experienced people who understand the wide spectrum of potential business solutions. Not everyone needs to file for bankruptcy. When advisers are allowed into the picture, they challenge the viewpoints of the client and work to build consensus. Companies experience a full range of available options even before a bankruptcy filing is put on the table.

From a retail perspective, in COVID-19 world, the cash crunch has become overwhelming. There are several reasons that a retailer (or a brand) feels the summer heat, and bankruptcy is looking (more and more) like a viable option. Perhaps there is too much debt, or too many store leases, or vendors are not being paid. Perhaps consumer habits have changed, or maybe there is litigation that didnt transact as planned. Whatever the case, at some point its time to call in industry experts for technical advice and for problem solving.

For any remaining retail doubters (that are just tuning in to the crisis), the bankruptcy list keeps getting longer and longer. Some of the notables are: Brooks Brothers, Lord & Taylor, Mens Warehouse, Jos. A. Banks (Tailored Brands), Lucky Brand, Neiman Marcus. J.Crew, J.C. Penney, Stage Stores SSI , Modells, Ann Taylor (Ascena), Sur La Table, J.Hilburn, GNC, True Religion, John Varvatos, and Chuck E. Cheese.

MMG explains that while Chapter 11 is not the only solution, its utilization potentially ensures that a companys creditors and stakeholders will recover their maximum value (whatever that might be). The filing is very public - as it runs through the bankruptcy court docket system. Information is exposed to scrutiny, and company secrets are laid bare for all to see. MMGs Mary Ann Domuracki also explains that, if the process is not handled properly, bankruptcy can result in owners losing control of their company, or losing control of the very outcome they seek.

The first question MMG Advisors will ask is: What solutions exist for the business? The next step is to identify what the core business would look like after the process completes. A retailer may want to cut stores, or a brand may want to discontinue some fashion lines. Whatever the change, the process starts with a plan. The team then works towards achieving consensus among the parties, since everyone involved loses some value from the original company.

If the business decides to file, they will approach the court with a plan detailing how they plan to operate, whether they need to liquidate assets or, (sadly) whether they can exist at all. The earlier that a plan is filed, the less costly for all concerned. The longer it takes, the harder it is to finish the deal. In the case of J.Hilburn (which was advised by MMG), they filed a reorganization plan on the first day in court. Their plan included their lenders, vendors, unsecured creditors, and equity holders and it allowed J.Hilburn to exit Chapter 11 in only 60 days.

When contemplating a Chapter 11, the choice exists to utilize section 363 of the bankruptcy code - which is a more common and faster method, allowing the company to sell assets in Chapter 11 with notice to potential buyers. There is a timeline, and the process could complete within 60 days (like J.Hilburn). In the absence of an upfront agreement, the bankruptcy could take 12 months to resolve.

Chapter 11 is generally referred to as reorganization bankruptcy. The company will be restructured, and it gets to live another day. Chapter 7 of the code is liquidation bankruptcy, and assets are sold to satisfy as many creditors as possible. The company name could potentially live past the bankruptcy - simply as an asset that has been transferred, but the core business is completely dissolved.

The speed of the bankruptcy is accelerated when there is a likely buyer or stalking horse engaged in the process. The potential buyer prepares an Asset Purchasing Agreement (APA) that is given to the court at the beginning of the proceedings. The bid from the stalking horse sets the floor for the asset bidding. An auction is held, others can bid against the stalking horse, and the court generally approves the outcome of that auction.

Allan Ellinger, co-founder and Senior Managing Partner of MMG Advisors, indicated: One of the benefits of Chapter 11 bankruptcy is that it draws a line in the sand, a line that insulates the new owners from any pre-bankruptcy liabilities that the new owner does not want to assume. This is a key component of the procedure, and one of the reasons that bankruptcy is becoming such a powerful resolution tool in this difficult retail environment.

During bankruptcy, the Company directors and officers maintain a fiduciary responsibility to protect the creditors and shareholders. Typically, the creditors will form an unsecured committee of volunteers who then approve (or disapprove) all the key steps. The committee is public, has an attorney, an accountant, and sometimes even a financial advisor. When Chapter 11 is filed, the company is finally free of liens and will exist as an ongoing operation.

In Americas COVID-19 economy, the restructuring process has become a bit more complex. Companies planning to file now have to deal with stores and offices that may not be open, find records that may not be available, and deal with people who may not be working. All this complicates an already difficult situation.

Eventually, the fashion industry will look back on these strange times and wonder how everything finally got resolved. While the federal government has helped employees during the COVID-19 crisis, they have left most employers to fend for themselves. With federal aid lacking, many credit markets have run completely dry, and several of todays prominent retailers have been forced to take matters into their own hands. Some have chosen to sell assets, some have pared back staff, and others hold open the option of bankruptcy which would (in most cases) allow them to start over with a clean slate.

The fashion industry is working really hard to survive these difficult times. COVID-19 is challenging the industry, and forcing retailers to face situations that they have never experienced before. Proper guidance is welcome, and looking at next steps, it is helpful to summon the sage wisdom of Warren Buffet who said:

In a chronically leaking boat, energy devoted to changing vessels is more productive than energy devoted to patching leaks.

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Fashion World Slammed By Retail Bankruptcies - MMG Explains The Process - Forbes

Late last month, Senators Marco Rubio (R-Fla.) and Susan Collins (R-Maine) introduced Senate Bill 4321 (S-4321), titled Continuing Small Business Recovery and Paycheck Protection Program Act (Bankruptcy Access Bill), which, if enacted, would permit businesses in bankruptcy to qualify for Paycheck Protection Program (PPP) loans. Unfortunately, as currently drafted, the Bankruptcy Access Bill appears to be of limited practical use, since participation in the PPP by debtors in bankruptcy would be subject to the Small Business Administrations (SBA) acceptance of their PPP loan applications, which is far from likely.

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) created the PPP under Section 7(a) of the Small Business Act, which authorizes the SBA to guarantee loans to qualified small businesses, with the goal of helping them keep their employees working during the pandemic. While the CARES Act eliminated for the PPP the 7(a) loan requirement that a business demonstrate it was unable to obtain credit from commercial sources, in favor of a good-faith representation that the current economic uncertainty makes the PPP loan request necessary to support its ongoing operations absent statutory direction to the contrary, the SBA treated the PPP like any other 7(a) loan by requiring an applicant to not be presently involved in any bankruptcy (Bankruptcy Exclusion). In support of the Bankruptcy Exclusion, the SBA argues that permitting debtors in bankruptcy to qualify for PPP loans would create unnecessary risk, which would limit the salability of PPP loans on the secondary market. This argument is significantly undercut given that, as created, PPP loans are to be forgiven to the extent the loan proceeds are used to pay payroll and other operating expenses of the business. Indeed, when the $350 billion PPP was created, it was thought that more than half of the aggregate principal amount of all PPP loans would be forgiven. Recent statutory changes to the PPP are likely to result in a greater percentage of the now $660 billion PPP being forgiven.

The Bankruptcy Access Bill was likely precipitated, at least in part, by the entry of numerous conflicting court orders regarding the enforceability of the Bankruptcy Exclusion. (See our related alert here.)

In an attempt to eliminate the above-mentioned confusion, the Bankruptcy Access Bill would amend the Bankruptcy Code to expressly authorize bankruptcy courts to allow debtors to obtain PPP loans. Specifically, a new provision, Subsection (g) of 11 U.S.C. 364, would provide that bankruptcy courts,

after notice and a hearing, may authorize a debtor in possession or a trustee that is authorized to operate the business to obtain a [PPP loan], and such loan shall be treated as a debt to the extent the loan is not forgiven, with priority [over administrative claims].

If the PPP loan is not entirely forgiven, the Bankruptcy Access Bill would grant the remaining principal amount of the PPP loan super-priority administrative claim status and thereby place the remaining PPP loan ahead of the claims of most unsecured creditors, including any other administrative claims.

Unfortunately, the foregoing Bankruptcy Code amendments would not be effective on enactment of the Bankruptcy Access Bill. Rather, the effectiveness of the Bankruptcy Code amendments would be entirely contingent on the SBAs agreement to process such PPP loan applications. In other words, the availability of PPP funds to bankruptcy debtors hinges on the cooperation of the very entity that created and has sought to enforce the Bankruptcy Exclusion.

It is not clear why the SBA would favor the potential marketability of PPP loans to third-party investors over the need of small businesses to gain access to funds to keep their employees employed and the business operating during this severe economic dislocation. Indeed, it can be argued that debtors in bankruptcy, particularly those seeking bankruptcy protection during the pandemic, would have a greater need than other qualified small businesses for the PPP, and the oversight of the bankruptcy court and the bankruptcy trustee would ensure proper use of PPP proceeds to keep the business operating and the employees on the jobthe principal goal of the PPP in the first instance.

While debtors may view the Bankruptcy Access Bill with a sense of optimism, the bill falls short of its lofty goals of expanding PPP access to bankruptcy debtors. As the SBA has spent the better part of four months seeking to enforce the Bankruptcy Exclusion in courts across the country, it is uncertain whether the SBA will soften its stance and accept PPP loan applications from debtors were the bill to be enacted. At a minimum, passage of the bill would telegraph to the SBA Congresss express intent to permit bankruptcy debtors to benefit from the PPP. However, desperate times call for bold action. The Bankruptcy Access Bill would be more effective were the bill to side with the needs of struggling businesses over those of the fledging secondary trading market for PPP loans by eliminating the SBAs buy-in requirement and instead instructing the SBA to accept PPP loan applications from bankruptcy debtors.

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Senate Bill Proposes To Expand Paycheck Protection Program To Businesses In BankruptcyBut With A Significant Catch - JD Supra

As bankrupt firms like J.C. Penney and Brooks Brothers look to jettison leases, landlords are already feeling the consequences. CBL & Associates Properties Inc., owner of more than 100 shopping centers in the United States, is preparing its own bankruptcy filing after rent collections cratered. And 16 percent of retail property loans bundled into CMBS were delinquent in July, according to research firm Trepp.

At least 25 major retailers have filed for bankruptcy this year, according to data compiled by Bloomberg.

The most recent additions include Tailored Brands Inc., owner of Mens Wearhouse and Jos. A. Bank, which is seeking to close about a third of its more than 1,200 stores, and Lord & Taylor parent company Le Tote, which said it could shut down all of the department stores remaining locations.

Its economical, its efficient, and it allows retailers to rationalize their footprint quickly, said Fred Ringel, co-chair of the business finance and restructuring practice at the law firm Robinson Brog Leinwand Greene Genovese & Gluck P.C. Ringel, who works for landlords, said hes busier than ever renegotiating leases and in some cases persuading tenants to forgo cancellations and stay under modified terms.

Take vitamin retailer GNC Holdings Inc. It operates hundreds of stores across the country, mostly in strip malls. Since filing for bankruptcy in June, GNC has asked to reject at least 500 leases, along with more than 50 franchise agreements and subleases, according to court records.

Meanwhile, CEC Entertainment Inc., the parent company of Chuck E. Cheese, is negotiating with its landlords after its June bankruptcy filing. It won court approval this week to defer rent payments as it evaluates which locations it wants to keep open.

And the US unit of Spanish retailer Desigual said it was forced to file after struggling to get rent abatements from its landlords. Unfortunately, DUSA had little success in getting landlords to realize the new reality that most tenants especially those in retail cannot afford to pay pre-COVID-19 rent, a representative for the firm said in court papers.

Landlords, in turn, have their own mortgages to worry about, which were also underwritten with pre-pandemic assumptions about rent collections. Amid the stress, Barry Sternlichts Starwood Capital Group missed payments on securitized debt linked to five shopping malls, and Saks owner Hudsons Bay Co. also skipped interest due on certain CMBS. Delinquencies on retail mortgages bundled into bonds climbed to 16 percent in July, from 3.8 percent in January, according to Trepp.

Some retailers can work out rent abatements and other lease modifications including terminations without filing for bankruptcy.

However, negotiating hundreds of deals outside of a court process can be challenging, especially for big retail chains that may have hundreds of landlords to deal with, said Navin Nagrani, an executive vice president at Hilco Real Estate.

Bankruptcy flips the power from landlords to tenants. Retailers can legally reject a swath of leases in court, sometimes leaving building owners to collect just pennies on the dollar.

Firms can also sell off favorable contracts to other parties to help repay creditors.

Sometimes a bankruptcy is the most advantageous way to get out of those leases, Nagrani said.

As many as 25,000 stores are expected to close in the US in 2020, mostly in shopping malls, according to Coresight Research. Department stores and fashion boutiques are seen as the most endangered.

More than half of mall department stores could close for good by the end of 2021, according to an April report from real estate research firm Green Street Advisors. J.C. Penney said last month that it would shutter more than 150 locations, while Neiman Marcus plans to pull out of New Yorks Hudson Yards development and close three other US locations.

The closures so far are just the tip of the iceberg, said Garrick Brown, head of Americas retail research for Cushman & Wakefield. Over the next two years, at least 1.2 billion of square feet 10 percent of already-occupied store real estate will go vacant, he said. Worst-case scenario, that could double.

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Wave of retail bankruptcies may sink landlords - BetaBoston

Last week, California Pizza Kitchen declared bankruptcy, and in the process revealed that it hadnt paid most of its leases, or interest payments, for four months and still lost a ton of money.

And on Monday, Matchbox Food Group filed for debt protection and made it known it wants better deals from its landlords or it would use the bankruptcy process to close some of its 12 restaurants.

Oncoming lease negotiations between restaurant chains and landlords represent the next major hurdle in the industry. Chains, particularly those owned by private equity groups and other investors, could end up filing for bankruptcy in considerable numbers in the coming months as they look at close locations.

To be sure, a lot of the restaurant chains currently struggling to pay off leases also happen to have private equity sponsors and, not coincidentally, a lot of debt.

Private equity groups frequently take risky financial strategies. The coronavirus has exposed that risk for a lot of them, putting chains that might have weathered the storm into bankruptcy, like, say, CEC Entertainment or the aforementioned California Pizza Kitchen, or CPK.

Still, the relationship between restaurants and landlords has become a major focal point during the pandemic.

When states began shutting down dine-in service in March, many expected a rash of bankruptcies as companies, with a fraction of their pre-coronavirus revenues, were unable to make rent or debt payments.

They frequently received breaks from both landlords and lenders, which has helped keep many companies out of bankruptcy. Of course, some bigger chains like The Cheesecake Factory and then Starbucks forced the issue, but for the most part companies were willing to work together.

But that only goes so far, and landlords in particular have bills of their own to pay. Ultimately, leases come due, and restaurants have to think hard about their locations. Thats setting up a situation in which many companies have to get out of leases.

Theres going to be a bloodbath, Aziz Hashim, chairman of Ruby Tuesday owner NRD Capital, told me back in May. His own chain has sped its closing timeline.

The problem is most acute with casual dining restaurants, which rely most heavily on in-restaurant dining and beverage service. In most of the country, such restaurants are at 50% capacity at best, and while they can add outdoor seating thats not always available or convenient, depending on the location.

Yet some fast-casual chains are in the same situation. As we reported last month, Potbelly told landlords for 100 locations it wants to close that it could file for bankruptcy if enough of them refused to buy out their leases.

Edwin Sheridan, a board member at Matchbox, basically told landlords in the companys announcement of its bankruptcy filing on Monday that if they didnt give out better terms the chain would close some of its units.

We aim to work with the landlords for each of our locations to find agreeable terms that will allow us to keep our restaurants open and continuing serving our customers, Sheridan said. If that is not possible, we will be forced to close locations.

California Pizza Kitchen also suggested that it has been negotiating with landlords. But it also has a heavy debt load and has struggled to generate cash going into the pandemic.

The casual dining pizza chain operated with more than $400 million in debt. The company said in a bankruptcy filing it has faced a liquidity crunch for the past two years. It was also looking for a buyer.

COVID-19 interrupted the sale process, sales plunged, and the company lost money. While CPK generated cash in June, even with same-store sales down 40%, it still generated a cash-flow deficit of negative $18.9 million between March and June, despite not having paid any interest on prepetition debt or rent on the majority of the restaurant portfolio.

To weather the current environment, the company said, it needed cash and a marked adjustment to its operations.

CPK has worked with Hilco Real Estate to negotiate with landlords and has received some $6.1 million in concessions over the next three years. However, the company is still on a path to right-sizing its lease footprint and is still in negotiations.

California Pizza Kitchen is certainly not the last bankruptcy, either. One name to watch: Red Lobster.

In March, Moodys Investors Service downgraded Red Lobsters credit rating, citing material deterioration in its earnings and credit metrics. Last week, Debtwire reported that the company hired an advisor to explore strategic alternatives.

Go here to read the rest:

Here comes the next wave of chain bankruptcies - Restaurant Business Online

The COVID-19 pandemic and the economic hardships it is causing will likely result in a wave of personal, farm and small-business bankruptcies in South Dakota and beyond in the coming months that will be both a result and a cause of a wider economic crisis spurred by the coronavirus.

So far, federal aid and unemployment programs, and several months of restricted access to the court system, have delayed a rise in bankruptcies from showing up in court filings.

But increased rates of unemployment, reduced incomes of people at all levels of the economy and a coming debt crisis will all play a role in the anticipated bankruptcy storm that could affect a wide range of individuals and businesses, including people who long saw themselves as financially stable, said Breck Miller, community relations director for Lutheran Social Services Center for Financial Resources in Sioux Falls.

It would not surprise me at all if we do see an increase in the number of bankruptcy filings, Miller said. The pandemic really put a lot of people in a financial bind, and I think its going to strike across the demographics. Its not just a low-income thing.

Federally backed financial assistance programs have helped keep food on many familys tables during the pandemic and have so far helped many of the hardest-hit South Dakotans stave off bankruptcy.

Mortgage forbearance, which allows for a delay or reduction in house payments, was granted as part of the federal CARES Act, and helped some homeowners manage debt. Temporary aid was also provided through new payment options from credit-card companies, and some borrowers were granted a pause in student loan payments.

But as federal assistance programs expire, and private lenders start seeking back payments on home and car loans, experts say many people in financially vulnerable positions will soon find that the debt they took on during the worst of the pandemic has become too much to handle.

The scariest thing for us in our office was that payment options werent necessarily laid out, or at least not understood clearly when people took the forbearances, said Miller.

It would not surprise me at all if we do see an increase in the number of bankruptcy filings and I think its going to strike across the demographics. Its not just a low-income thing. Breck Miller, Lutheran Social Services

Mortgage payments delayed through forbearance still must be paid, sometimes as soon as the forbearance period ends. A homeowner could be on the hook for hundreds or even thousands of dollars in back payments that must be made and carry the risk of defaulting on loans.

Back payments alone will drive more people to seek bankruptcy protections in the coming months, said Clair Gerry, a bankruptcy attorney from Sioux Falls.

For that reason alone I would expect to see a big uptick in Chapter 13s, Gerry said of the personal bankruptcy filings.

As of late July, 16,000 South Dakota residents were unemployed, and many were forced to turn to credit cards or drawing down savings to survive, Miller said. As of August, those unemployed workers lost the $600 weekly enhanced unemployment benefit created by Congress as part of its pandemic relief efforts.

A rising wave of bankruptcies could lengthen the pandemics economic recession as small businesses and consumers struggle to restructure their debts or sell off what they own or write off debts they cant pay. The burden has already been immense for many families at all income levels in South Dakota, many of whom have said they couldnt withstand an unexpected $400 expense without taking on more debt even before COVID-19 hit.

Consumer spending, meanwhile, is sure to fall and the economy overall will suffer, said Joe Mahon, an economist and outreach director at the Minneapolis Federal Reserve Bank.

Think of all those people who lost their jobs and lost their incomes, Mahon said. Even with the unemployment benefits that they might have been receiving, theyre probably thinking more about hanging on to their discretionary money rather than going out and spending on appliances and clothing and things like that.

If consumers are stuck paying off debts, they cant spend their money at local businesses, many of which also took on additional debt to survive the pandemic and which will be less able to expand. That will result in fewer job openings for people trying to return to work as their unemployment runs out and the economy continues to open up

We know that that large of a shock to employment is going to have a long and persistent feedback effect on the economy, Mahon said.

Exactly when the bankruptcy bomb will go off is anybodys guess at this point, economists and bankruptcy experts say, but they worry it is only a matter of time before filings rise rapidly.

My phone calls right now, a substantial part of them, are asking about what happens when this is over, with people asking, Should I come see you?, Gerry said. Based on those calls, I just know theres a storm looming everybody is predicting that theres going to be a lot of bankruptcies filed by fall or winter.

Relief efforts stemming bankruptcy flood, for now

So far, 2020 has been a relatively slow year for bankruptcy courts. Nationwide, total bankruptcy filings were down about 23% compared to the first six months of 2019. In South Dakota, by the end of July, bankruptcy filings were down about 16% compared to the first seven months of 2019, said South Dakota Bankruptcy Court clerk Frederick Entwistle.

Much of the decline is due to a near total shutdown in bankruptcy activity at courts that went dark during the last half of March and all of April, Entwistle said. But by the end of May, bankruptcy filings had returned to near-normal levels in South Dakota. By the end of June, 416 personal bankruptcies had been filed in South Dakota during the calendar year, according to data from the American Bankruptcy Institute.

There are several reasons bankruptcy filings have yet to rise. One of the biggest reasons may actually be the relatively high unemployment rate. At the end of June, 7.2% of the South Dakota workforce was unemployed, which is more than double the pre-pandemic unemployment rate of 3.1% recorded in March.

Bankruptcy attorneys and financial counselors have recommended to clients that they hold off on filing for bankruptcy until the worst of their financial losses have ended. Often, that meant waiting until finding a job and figuring out what their new monthly income would be. If an individual files for bankruptcy but has to keep living off of credit cards or other forms of debt, any debt incurred after the initial filing wont be discharged or reorganized as part of the bankruptcy proceeding.

There are other good reasons to hold off on filing for bankruptcy right now, Gerry said. Sometimes waiting until after a tax return has been received and spent is a good idea, for example. Spending down one-time payments such as stimulus checks or other state or federal financial assistance is also a good idea to do before filing for bankruptcy.

When COVID hit, everyone was kind of holding their breath. Thats why were waiting for the storm to break, until people get back to work and we find out what the new norm is, Gerry said. When they dont have a paycheck coming in, theyre not being garnished. And right now, theres a lot less collection-type action because collectors know theres not much they can do at this point.

South Dakotans, in general, also tend to avoid bankruptcy. The state currently ranks 45th lowest in the per-capita rate of bankruptcy filings out of the 50 states and has had one of the lowest per-capita bankruptcy filing rates for more than a decade. Over the past five years, there have been fewer than 1,100 personal bankruptcies filed in the state each year. In 2019, just 964 people or married couples filed for either chapter 7 or chapter 13 bankruptcy.

Recessions, though, tend to push people beyond their financial limits faster and farther than they can cope with. In 2010, when the effects of the Great Recession of 2008 peaked in South Dakota, 2,000 people filed for bankruptcy protection, nearly double the number from before the Great Recession began.

Only a matter of time before a crash

Experts cannot predict just how bad the COVID-19 economic fallout will be, but the picture is not likely to be pretty. Unlike the Great Recession, which took years to play out and left agriculture relatively unscathed, the COVID-19 economic crisis has hit every state at roughly the same time and in much the same way.

South Dakota, despite its lack of state government mandated business closures or other mandated social distancing measures, fell off the same economic cliff as its more restrictive neighbors, Mahon said. Traffic at businesses of all types, but most especially bars, hotels and restaurants, cratered in April and didnt return to pre-pandemic levels until July.

You still had people losing their jobs. We know employment has fallen in the state. So you would expect that to have that feed-through effect on household finances, that will ultimately show up in bankruptcies, Mahon said.

COVID-19 also came at a time when farmers and ranchers, South Dakotas economic bedrock, were struggling against a trade war and low prices for grain, soybeans and cattle. In fact, January and February of 2020 saw overall bankruptcy filings in South Dakota increase over the same period in 2019 due to a jump in farm bankruptcies, said Gerry.

We were doing a lot of restructuring or mediation for farms near the first part of the year to get ready for spring planting, he said.

The news isnt all bad, though. More South Dakota small businesses have reopened and have started hiring again when compared to other states. South Dakota also boasts slightly more new job postings than in its neighbors, according to data from the Minneapolis reserve bank.

Much of what happens over the next few months will depend on what Congress comes up with as far as economic stimulus, and how long it takes those currently unemployed to get back to work. Avoiding a surge in bankruptcies, though, will take a lot more stimulus and far faster employment and wage growth than is likely to occur.

It would take more than the stimulus that was talked about last time, Gerry said. That just kept people fed, basically doing that again and taking care of emergencies is not going to cure the future.

Individuals can file forChapter 7orChapter 13bankruptcies. Chapter 7 is typically used when a debtor doesnt have a home or car theyre trying to keep. All debts that cant be settled after a debtors major assets are sold are discharged under Chapter 7. Under Chapter 13 bankruptcy, debtors are allowed to restructure past due payments in order to avoid such things as foreclosure on a home or repossession of a car. Municipalities, including cities, towns, villages, taxing districts, municipal utilities, and school districts, may file aChapter 9bankruptcy that allows them to reorganize. Businesses may file bankruptcy underChapter 7to liquidate and shutdown or underChapter 11, which allows them to reorganize and restructure debt so they can continue to do business. AChapter 12bankruptcy allows family farmers and fishermen to propose and execute a plan to pay past due debts over the course of three to five years and thus avoid foreclosure. Bankruptcy filings that involve parties from more than one country are filed underChapter 15.

Go here to read the rest:

Experts: Wave of bankruptcies likely in S.D. as pandemic stifles incomes and aid runs out - KELOLAND.com

As bankrupt firms like J.C. Penney Co. and Brooks Brothers Group Inc. look to jettison leases, landlords are already feeling the consequences. CBL & Associates Properties Inc., owner of more than 100 shopping centers in the U.S., is preparing its own bankruptcyfilingafter rent collections cratered. And 16% of retail property loans bundled into CMBS were delinquent in July, according to research firm Trepp.

Filing surge

At least 25 major retailers have filed for bankruptcy this year, according to data compiled by Bloomberg. The most recent additions include Tailored Brands Inc., owner of Mens Wearhouse and Jos. A. Bank, which is seeking tocloseabout a third of its more than 1,200 stores, and Lord & Taylor parent companyLe Tote, which said it could shut down all of the department stores remaining locations.

Its economical, its efficient and it allows retailers to rationalize their footprint quickly, said Fred Ringel, co-chair of the business finance and restructuring practice at the law firm Robinson Brog Leinwand Greene Genovese & Gluck P.C. Ringel, who works for landlords, said hes busier than ever renegotiating leases and in some cases persuading tenants to forgo cancellations and stay under modified terms.

Take vitamin retailer GNC Holdings Inc. It operates hundreds of stores across the country, mostly in strip malls. Since filing for bankruptcy in June, GNC has asked to reject at least 500 leases, along with more than 50 franchise agreements and subleases, according to court records.

Meanwhile, CEC Entertainment Inc., the parent company of Chuck E. Cheese, is negotiating with its landlords after its June bankruptcy filing. It won court approval this week to defer rent payments as it evaluates which locations it wants to keep open.

And the U.S. unit of Spanish retailer Desigual said it was forced to file after struggling to get rent abatements from its landlords. Unfortunately, DUSA had little success in getting landlords to realize the new reality that most tenantsespecially those in retail -- cannot afford to pay pre-Covid-19 rent, a representative for the firm said in court papers.

Landlords, in turn, have their own mortgages to worry about, which were also underwritten with pre-pandemic assumptions about rent collections. Amid the stress, Barry Sternlichts Starwood Capital Groupmissedpayments on securitized debt linked to five shopping malls, and Saks owner Hudsons Bay Co. alsoskippedinterest due on certain CMBS. Delinquencies on retail mortgages bundled into bonds climbed to 16% in July, from 3.8% in January, according to Trepp.

Tenant power

Some retailers can work out rent abatements and other lease modifications including terminations without filing for bankruptcy. However, negotiating hundreds of deals outside of a court process can be challenging, especially for big retail chains that may have hundreds of landlords to deal with, said Navin Nagrani, an executive vice president at Hilco Real Estate.

Bankruptcy flips the power from landlords to tenants. Retailers can legally reject a swath of leases in court, sometimes leaving building owners to collect just pennies on the dollar. Firms can also sell off favorable contracts to other parties to help repay creditors.

Sometimes a bankruptcy is the most advantageous way to get out of those leases, Nagrani said.

As many as 25,000 stores are expected to close in the U.S. in 2020, mostly in shopping malls, according to Coresight Research. Department stores and fashion boutiques are seen as the most endangered.

More than half of mall department stores could close for good by the end of 2021, according to an April report from real estate research firm Green StreetAdvisors. J.C. Penney said last month that it wouldshuttermore than 150 locations, while Neiman Marcus plans to pull out of New Yorks Hudson Yards development andclosethree other U.S. locations.

The closures so far are just the tip of the iceberg, saidGarrick Brown, head of Americas retail research for Cushman & Wakefield. Over the next two years, at least 1.2 billion of square feet10% of already-occupied store real estatewill go vacant, he said. Worst-case scenario, that could double.

Read more from the original source:

Busted retailers use bankruptcy to break leases by the thousands - Crain's New York Business

LOS ANGELES, CALIFORNIA - APRIL 17: Savannah B. shows the pasta that California Pizza Kitchen sells ... [+] as groceries to stay afloat in reaction to the coronavirus on April 17, 2020 in Burbank, California. (Photo by Amy Sussman/Getty Images)

Theres an alarming amount of well-recognized, long-standing companies that have filed for bankruptcy protection during the Covid-19 pandemic. Maybe because the announcements have been spread out over time, this big issue hasn't received the appropriate media coverage. When the corporations file for bankruptcy, stores, factories and facilities are closed down and tens of thousands of workers are laid off. As several sectors have been hit hard, there may not be any jobs available for those whove been downsized. For instance, over the last couple of months, we have witnessed bankruptcy filingsranging from retail stores to oil and gas producers.

Lord & Taylor, the oldest retailer in the nation, founded in 1826, filed for bankruptcy protection. Previously, J.C. Penney, J. Crew, Brooks Brothers, Lucky Dungarees, Neiman Marcus, Lucky Brand, True Religion, the parent company of Ann Taylor, Loft, Lane Bryant, Catherines stores and Tailored Brands, which owns Men's Wearhouse and Jos. A. Bank.

Retailing has always been a tough market to operate. Profits can be razor thin and if shops miss a trend or have a bad holiday selling season, theyre in trouble. Now, they have to compete against the Amazon juggernaut. Its almost impossible for these mostly mall-based chains to survive and compete against Amazon when they were forced to close down their operations. Even when opened, fear of contracting the virus made many people stay away. Those who bravely went to the malls and stores had to wear masks and felt uncomfortable trying on clothes that may have been worn by a number of other folks.

Collectively, these companies will shutter thousands of their stores throughout the country. With the closures and less business, significantly large numbers of workers will lose their jobs. Theres a huge dilemma for the newly unemployedwhere can they go if all of the other department and retail stores have either closed or are not faring well in this environment? Theyll join the ranks of the over 53 million Americans whove already filed for unemployment benefits. For now, the newly jobless wont receive the enhanced $600 per week that was part of the federal governments stimulus package, which ended in July.

Retailers are just one example. The shutdowns stopped many businesses from operating and put millions of people out of work. Companies saw their revenue plummet and people lost their salaries. This results in a significant worrisome decline in tax revenue for a large number of cities. They are now asking the federal government for bailouts, as they risk financial ruin and possible bankruptcy. As thousands of companies were forced to shut down, some are now permanently closed, along with millions of people out of work. Tax revenue has fallen off of a cliff. Local governments revenues are thought to be down by about $11.6 billion in 2020with no end in sight. For cities in the poorest shape, the pandemic could mean bankruptcy. Those who are a little better off will see a degradation in the quality of the lives of their citizens, as police, teachers, garbage collectors, firefighters and other public employees will be terminated to save costs.

The 35-year-old casual-dining chain, California Pizza Kitchen, recently filed for bankruptcy. The pizza chain, similar to other restaurants and chains, were told to close, thereby losing business, revenue and profits. Even when opened, with fewer patrons allowed to dine, it's nearly impossible for the food establishments to turn a profit. If restaurants did not have a robust delivery service, their situations worsened.To stay afloat, in response to changing consumer needs and less patrons, California Pizza Kitchen started selling grocery items during the pandemic.

Similar to the retail space, there was a slew of bankruptcies, including Chuck E. Cheese, Italian food chain Vapiano, Le Pain Quotidien's U.S. unit, the parent company of Bravo and Brio and the largest franchisee of Pizza Hut and Wendy's with thousands of locations.

The oil and gas industry was slammed, as travel stopped and business and factories closed down. Similar to the retail space, a large number of oil and gas companies filed for bankruptcy protection. Noble Corporation, an offshore oil-and-gas driller, filed for bankruptcy last Friday. Nobles just the most recent victim of the economic fallout from the outbreak. It joins the ranks of some of the largest, most well-known oil and gas companies that have also filed for bankruptcy, including Chesapeake Energy, Ultra Petroleum, Whiting Petroleum, Denbury Resources, Extraction Oil & Gas and others.

No one is safenot even the company that provides us with the soft, pleasant and sometimes irritating elevator music. The owner of Muzak has filed quick bankruptcy to cut $400 million in debt.

In addition to the thousands of store closures and the large numbers of people out of work, theres a dark side to all of this thats gone underreported. A large number of the companies that have filed for bankruptcy protection handed out lush bonuses to their CEOs and executives, according to Reuters. These bonuses are paid out via a loophole. Bankruptcy law bans this practice while companies are undergoing the process. However, theres no rule for doling out money months before the filing.

The bankruptcy trend will further weaken companies and some may never recover. Amazon, Walmart and a small handful of other companies will take their market share and become bigger and stronger. This will end up with fewer choices for consumers and less jobs available for those seeking employment. With a small number of corporations dominating their respective sectors and millions of people out of work, it's only a matter a time before wages are pushed down and expectations of employees vastly increase. It's time that attention is paid to this problem.

More here:

The Increase In Corporate Bankruptcies Is Bad News For Workers And Job Seekers - Forbes

BUILDING PERMITS

(Listed by owner, tenant or building name. This weekly update lists new commercial construction, expansions and enlargements of more than $50,000. Information is from initial applications and is subject to change. Dollar amount is valuation declared by owner.)

20-058743 Still She Rises Tulsa, 612 E. 46th St. North, alteration, $1,000,000.

20-062534 Century 21, 4004 E. 51st St., new, $350,000.

20-057453 Woodland Hills Mall, 7021 S. Memorial Drive, alteration-priority, $75,000.

20-058266 W Design, 608 E. Third St., alteration, $1,632,691.

20-058958 4221 4221, S. 68th Ave., alteration, $125,000.

20-055485 Wuana Inc., 6935 E. 13th St. Alteration, $1,008,301.

20-056473 Fox Hotel, 11 E. Reconciliation Way N., alteration, $40,000.

BUSINESS BANKRUPTCIES

(Weekly update includes filings classified as business in the numerical list of the U.S. Bankruptcy Court, Northern District in Tulsa, and which also list business as nature of debt on bankruptcy document.)

20-1246-R William Michael Heck, 14450 S. Dogwood St., Glenpool, assets: $205,561.97, liabilities: $562.529.75, attorney: Ron D. Brown, chapter 7.

20-11248-M Robert Arthur Flory, 1719 S. Yorktown, assets: $63,474, liabilities: $743,008.51, attorney: Ron D. Brown, chapter 7.

20-11261-R Christopher Dean Henderson, 16144 E. 107th St. North, Owasso, assets: $235,740, liabilities: $3,312,608.35, attorney: Scott P. Kirtley, chapter 7.

More:

For the record: Building permits and bankruptcies | Tulsa Business - Tulsa World

Hello!

Congrats on making it to another Friday! It's hard to believe it's already (checks notes...) August! If you're generally confused, as I am, about what day of the week (or month) it is, don't sweat it. You can always count on the retail team at Business Insider to let you know another week has passed by with The Drive Thru, our weekly and punctual round-up of everything you need to know in retail and restaurant news.

By the way, if you haven't yet,subscribe to The Drive-Thru here to stay on top of it all and to get me, Shoshy Ciment, and my colleague, Kate Taylor, in your inbox every Friday!

Here's what you need to know:

Lord & Taylor filed for bankruptcy on Monday REUTERS/Tom Brenner/File Photo

Another week, another bankruptcy filing. This week, three major companies joined the ever-growing list of the 28 retailers that have filed for bankruptcy or liquidation in 2020.

Bucking the trend: On the bright side, Dick's Sporting Goods announced it is opening 11 new locations this month.

An image of one slide of a L'Oreal employee's computer screensaver An anonymous current L'Oreal employee

L'Oral USA, which employsnearly 11,000 people, began calling its employees back to work in early July. But internal communications reveal a sense of fear and frustration among employees regarding returning to the offices.

Some employees who want to work from home are being required to give the company access to their medical history or a doctor's note. At the same time, L'Oreal workers say they are being bombarded with screensaver images of smiling employees in the office, even as they dread returning to work in person.

"They keep repeating how positive people are reacting and it's bull***t because no one wants to go back," said a current L'Oral employee who works in California. "It's pure gaslighting."

In a statement to Business Insider, L'Oreal said, "Being together is a key ingredient to our culture and essential to the success of our business in a creative industry."

Read some more of my reporting on L'Oreal here.

Bethany went to a private shopping session at J.Crew and tried clothes inside an actual dressing room. Bethany Biron/Business Insider

The future of the physical store is in flux. As Madeline reported this week, "department stores will likely have to evolve to survive." Such changes, she found, could play out in the form of downsizing or an upgrade to omnichannel services.

Some stores are already getting creative. J.Crew is offering 30-minute private shopping sessions to allow shoppers to use the normally closed fitting rooms. Bethany tried a session and said it was the "closest to a state of pre-pandemic normalcy" she felt since the pandemic began.

At the same time, new technologies are making it easier for stores to implement social distancing. Catherine rounded up five retail startups, which have raised $90m from VCs, that are focused on making the future of shopping a safe and distant one.

The Oreo was created out of a sibling rivalry between two brothers. Shoshy Ciment/Business Insider

Some of our favorite brands and chains have interesting and unexpected origin stories. Here are few pieces of retail history you might not have heard about before.

Everything else you need to know:

Continue reading here:

The Drive Thru: L'Oreal, retail bankruptcies, the future of the store - Business Insider - Business Insider

Houston offshore oil company Fieldwood Energy has filed for its second bankruptcy in just more than two years.

Fieldwood filed for Chapter 11 reorganization late Monday with the U.S. Bankruptcy Court in Houston. The company has $1.8 billion of debt, court filings show.

The 2014-16 oil crash took a toll on thecompany, one of the largest offshore oil and gas producers operating in the Gulf of Mexico, forcing it into bankruptcy in February 2018.

The privately held company was able to shed $1.6 billion of debt during the first bankruptcy but the ongoing downturn caused by the coronavirus pandemic required further restructuring and a second Chapter 11 filing, court records show.

Bankruptcy: Judge gives BJ Services another 30 days to continue operations

As part of its second bankruptcy, Fieldwood has entered into a restructuring agreement with the support of lenders that hold about two-thirds of the $1.1 billion loan that makes up most of the company's $1.8 billion of debt, court records show.

Fieldwood tried to avoid a second bankruptcy in March by turning off offshore wells in 29 low-margin fields. That move saved the company $5 million a month, but as domestic oil prices continued to fall, the company halted production at all but 10 fields, court records show.

In other cost-cutting measures, the company also laid off employees and implemented 10 percent salary cuts for employees and contractors making more than $150,000 per year. The number of job cuts was not given but the company has 635 employees remaining, court records show.

Fuel Fix: Get daily energy news headlines in your inbox

Fieldwood turned to New York restructuring firm AlixPartners in April and obtained forbearances in May that gave the company more time for restructuring negotiations to continue.

The company and its creditors are expected to appear before U.S. Bankruptcy Judge Marvin Isgur in a virtual hearing Tuesday afternoon.

See more here:

Offshore oil company files for second bankruptcy in two years - Houston Chronicle

Proposed payouts from the McNally Smith College of Music bankruptcy include nothing for students.

Trustee Patti Sullivan last month gave the court a list of people, companies and governmental agencies who will share the $904,933 that remains after liquidating assets from the former St. Paul music school, which abruptly closed in December 2017.

Sullivan and various consultants and law firms involved in administering the bankruptcy case would get $199,744.

The IRS would get $209,089 and the Minnesota Department of Revenue $44,074.

A long list of former college faculty and staff who went weeks without being paid would get the remaining $452,026, in payouts ranging from $165 to $12,762 per person far less than they requested, in many cases.

Under federal bankruptcy law, wages take priority over prepayments for services. So, none of the roughly $564,000 in tuition paid in advance for the spring 2018 semester disclosed in school co-founder Jack McNallys personal bankruptcy filing will be returned to students or their parents.

However, students who took out federal loans were eligible for forgiveness as long as they did not transfer their credits to another school.

And 10 former students did receive undisclosed payouts from McNallys Smith insurance company to resolve claims separate from the bankruptcy case. The students claimed the college lied to them about its weak accreditation.

Besides students, those set to receive nothing from the liquidation include school co-founder Doug Smith and his wife, who loaned the school over $683,000 combined in an effort to keep it in business.

Altogether, the proposed bankruptcy distribution lists $7.55 million in allowable claims, 88 percent of which is set to go unpaid in the final distribution.

Objections to the distribution plan are due Monday.

View post:

McNally Smith bankruptcy leaves nothing for students of music school - TwinCities.com-Pioneer Press

The COVID-19 pandemic and the economic hardships it is causing will likely result in a wave of personal, farm and small-business bankruptcies in South Dakota and beyond in the coming months that will be both a result and a cause of a wider economic crisis spurred by the coronavirus.

So far, federal aid and unemployment programs, and several months of restricted access to the court system, have delayed a rise in bankruptcies from showing up in court filings.

But increased rates of unemployment, reduced incomes of people at all levels of the economy and a coming debt crisis will all play a role in the anticipated bankruptcy storm that could affect a wide range of individuals and businesses, including people who long saw themselves as financially stable, said Breck Miller, community relations director for Lutheran Social Services Center for Financial Resources in Sioux Falls.

It would not surprise me at all if we do see an increase in the number of bankruptcy filings, Miller said. The pandemic really put a lot of people in a financial bind, and I think its going to strike across the demographics. Its not just a low-income thing.

Federally backed financial assistance programs have helped keep food on many familys tables during the pandemic and have so far helped many of the hardest-hit South Dakotans stave off bankruptcy.

Mortgage forbearance, which allows for a delay or reduction in house payments, was granted as part of the federal CARES Act, and helped some homeowners manage debt. Temporary aid was also provided through new payment options from credit-card companies, and some borrowers were granted a pause in student loan payments.

But as federal assistance programs expire, and private lenders start seeking back payments on home and car loans, experts say many people in financially vulnerable positions will soon find that the debt they took on during the worst of the pandemic has become too much to handle.

The scariest thing for us in our office was that payment options werent necessarily laid out, or at least not understood clearly when people took the forbearances, said Miller.

Mortgage payments delayed through forbearance still must be paid, sometimes as soon as the forbearance period ends. A homeowner could be on the hook for hundreds or even thousands of dollars in back payments that must be made and carry the risk of defaulting on loans.

Back payments alone will drive more people to seek bankruptcy protections in the coming months, said Clair Gerry, a bankruptcy attorney from Sioux Falls.

For that reason alone I would expect to see a big uptick in Chapter 13s, Gerry said of the personal bankruptcy filings.

As of late July, 16,000 South Dakota residents were unemployed, and many were forced to turn to credit cards or drawing down savings to survive, Miller said. As of August, those unemployed workers lost the $600 weekly enhanced unemployment benefit created by Congress as part of its pandemic relief efforts.

A rising wave of bankruptcies could lengthen the pandemics economic recession as small businesses and consumers struggle to restructure their debts or sell off what they own or write off debts they cant pay. The burden has already been immense for many families at all income levels in South Dakota, many of whom have said they couldnt withstand an unexpected $400 expense without taking on more debt even before COVID-19 hit.

Consumer spending, meanwhile, is sure to fall and the economy overall will suffer, said Joe Mahon, an economist and outreach director at the Minneapolis Federal Reserve Bank.

Think of all those people who lost their jobs and lost their incomes, Mahon said. Even with the unemployment benefits that they might have been receiving, theyre probably thinking more about hanging on to their discretionary money rather than going out and spending on appliances and clothing and things like that.

If consumers are stuck paying off debts, they cant spend their money at local businesses, many of which also took on additional debt to survive the pandemic and which will be less able to expand. That will result in fewer job openings for people trying to return to work as their unemployment runs out and the economy continues to open up

We know that that large of a shock to employment is going to have a long and persistent feedback effect on the economy, Mahon said.

Exactly when the bankruptcy bomb will go off is anybodys guess at this point, economists and bankruptcy experts say, but they worry it is only a matter of time before filings rise rapidly.

My phone calls right now, a substantial part of them, are asking about what happens when this is over, with people asking, Should I come see you?, Gerry said. Based on those calls, I just know theres a storm looming everybody is predicting that theres going to be a lot of bankruptcies filed by fall or winter.

stemming bankruptcy flood, for nowSo far, 2020 has been a relatively slow year for bankruptcy courts. Nationwide, total bankruptcy filings were down about 23% compared to the first six months of 2019. In South Dakota, by the end of July, bankruptcy filings were down about 16% compared to the first seven months of 2019, said South Dakota Bankruptcy Court clerk Frederick Entwistle.

Much of the decline is due to a near total shutdown in bankruptcy activity at courts that went dark during the last half of March and all of April, Entwistle said. But by the end of May, bankruptcy filings had returned to near-normal levels in South Dakota. By the end of June, 416 personal bankruptcies had been filed in South Dakota during the calendar year, according to data from the American Bankruptcy Institute.

There are several reasons bankruptcy filings have yet to rise. One of the biggest reasons may actually be the relatively high unemployment rate. At the end of June, 7.2% of the South Dakota workforce was unemployed, which is more than double the pre-pandemic unemployment rate of 3.1% recorded in March.

Bankruptcy attorneys and financial counselors have recommended to clients that they hold off on filing for bankruptcy until the worst of their financial losses have ended. Often, that meant waiting until finding a job and figuring out what their new monthly income would be. If an individual files for bankruptcy but has to keep living off of credit cards or other forms of debt, any debt incurred after the initial filing wont be discharged or reorganized as part of the bankruptcy proceeding.

There are other good reasons to hold off on filing for bankruptcy right now, Gerry said. Sometimes waiting until after a tax return has been received and spent is a good idea, for example. Spending down one-time payments such as stimulus checks or other state or federal financial assistance is also a good idea to do before filing for bankruptcy.

When COVID hit, everyone was kind of holding their breath. Thats why were waiting for the storm to break, until people get back to work and we find out what the new norm is, Gerry said. When they dont have a paycheck coming in, theyre not being garnished. And right now, theres a lot less collection-type action because collectors know theres not much they can do at this point.

South Dakotans, in general, also tend to avoid bankruptcy. The state currently ranks 45th lowest in the per-capita rate of bankruptcy filings out of the 50 states and has had one of the lowest per-capita bankruptcy filing rates for more than a decade. Over the past five years, there have been fewer than 1,100 personal bankruptcies filed in the state each year. In 2019, just 964 people or married couples filed for either chapter 7 or chapter 13 bankruptcy.

Recessions, though, tend to push people beyond their financial limits faster and farther than they can cope with. In 2010, when the effects of the Great Recession of 2008 peaked in South Dakota, 2,000 people filed for bankruptcy protection, nearly double the number from before the Great Recession began.

Only a matter of

Experts cannot predict just how bad the COVID-19 economic fallout will be, but the picture is not likely to be pretty. Unlike the Great Recession, which took years to play out and left agriculture relatively unscathed, the COVID-19 economic crisis has hit every state at roughly the same time and in much the same way.

South Dakota, despite its lack of state government mandated business closures or other mandated social distancing measures, fell off the same economic cliff as its more restrictive neighbors, Mahon said. Traffic at businesses of all types, but most especially bars, hotels and restaurants, cratered in April and didnt return to pre-pandemic levels until July.

You still had people losing their jobs. We know employment has fallen in the state. So you would expect that to have that feed-through effect on household finances, that will ultimately show up in bankruptcies, Mahon said.

COVID-19 also came at a time when farmers and ranchers, South Dakotas economic bedrock, were struggling against a trade war and low prices for grain, soybeans and cattle. In fact, January and February of 2020 saw overall bankruptcy filings in South Dakota increase over the same period in 2019 due to a jump in farm bankruptcies, said Gerry.

We were doing a lot of restructuring or mediation for farms near the first part of the year to get ready for spring planting, he said.

The news isnt all bad, though. More South Dakota small businesses have reopened and have started hiring again when compared to other states. South Dakota also boasts slightly more new job postings than in its neighbors, according to data from the Minneapolis reserve bank.

Much of what happens over the next few months will depend on what Congress comes up with as far as economic stimulus, and how long it takes those currently unemployed to get back to work. Avoiding a surge in bankruptcies, though, will take a lot more stimulus and far faster employment and wage growth than is likely to occur.

It would take more than the stimulus that was talked about last time, Gerry said. That just kept people fed, basically doing that again and taking care of emergencies is not going to cure the future.

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Experts expect wave of bankruptcies as pandemic stifles incomes, aid runs out - AberdeenNews.com

10 August 2020

Minden Gross LLP

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On April 27, 2020, the Ontario Court of Appeal released itsdecision in Curriculum Services Canada/Services DesProgrammes D'Etudes Canada (Re), 2020 ONCA 267("Curriculum"). This case addresses a commerciallandlord's rights as a creditor in the bankruptcy of its tenantfollowing the disclaimer of the lease by the trustee inbankruptcy.

By way of background, it is worth noting that:

Following the tenant's bankruptcy in Curriculum,the landlord filed a proof of claim in bankruptcy, asserting both aPreferred Claim (relying on the BIA) and an unsecured claim forFuture Damages (relying on the principles stated in HighwayProperties). The trustee in bankruptcy disclaimed the leaseand allowed the Rental Arrears Portion of the Preferred Claim,without addressing the Accelerated Rent Portion of the PreferredClaim. Further, the trustee disallowed the landlord's unsecuredclaim for Future Damages on the basis that the law deems "thedisclaimer of a lease in Ontario by a trustee in bankruptcy as aconsensual surrender of the lease by the tenant to the landlord,and consequently no claim for damages can be found on the cessationof obligations under the lease."

Not surprisingly, the landlord appealed the trustee'sdecision to the Ontario Superior Court of Justice, arguing that thelandlord's losses flowing from the disclaimer of lease arecontractual damages and "should be treated equally with anycontractual damages potentially suffered by any of Curriculum'sother creditors." The Superior Court sided with the trusteeand dismissed the landlord's appeal.

The landlord appealed again. The Ontario Court of Appeal allowedthe appeal in part, to allow the landlord to rank as an unsecuredcreditor for the Accelerated Rent Portion of its Preferred Claim,relying on Section 136(1)(f) of the BIA. However, the Court foundthat the disclaimer of the Lease by the trustee in bankruptcyoperated to end the tenant's obligations under the Lease anddismissed the landlord's claim to rank as an unsecured creditorto recover Future Damages.

The Court of Appeal explained that Mussens Ltd., Re,[1933] O.W.N. 459 (Ont. S.C.) ("Mussens")"stands for the principle that, under Ontario law, the trusteeof a bankrupt tenant is permitted by statute to bring an end to thelease, and all future obligations of the tenant thereunder, bysurrendering possession of the leased premises or disclaiming thelease within three months of the bankruptcy."

The Court found that while it would not support aninterpretation of Mussens that would characterize adisclaimer as a consensual surrender for all purposes, Crystalline Investments Ltd. v. DomgroupLtd., [2004] 1 S.C.R. 60 (S.C.C.) left intact therule articulated in Mussens that on disclaimer of acommercial lease by its trustee, an Ontario landlord has no claimas an unsecured creditor in the bankrupt tenant's estate forFuture Damages, except to recover the Accelerated Rent Portion ofthe Preferred Claim, which is specifically provided for bystatute.

Further, while Highway Properties recognized that alease is also a contract, and provided for a landlord's optionto accept a tenant's repudiation and sue for Future Damages,the case did not address a situation of bankruptcy or insolvencyand the remedies for a tenant's repudiation do not apply once atrustee has disclaimed the lease.

We were relieved to see the Ontario Court of Appeal allow thelandlord's Preferred Claim in its entirety (both the RentalArrears Portion and the Accelerated Rent Portion). However, wequestion the correctness in law of the decision regarding FutureDamages in light of the Supreme Court's decision in HighwayProperties. Additionally, we do not understand why thelandlord would be entitled to claim as an unsecured creditor forthe Accelerated Rent Portion of its Preferred Claim, which clearlyincludes post-disclaimer obligations, but not for Future Damages.Unfortunately, since the landlord chose not to appeal to theSupreme Court, the Court of Appeal's decision inCurriculum is now binding law in Ontario, and it will berelied upon by trustees in bankruptcy to reject a landlord'sunsecured claim for Future Damages.

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.

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The COVID-19 pandemic and the economic hardships it is causing will likely result in a wave of personal, farm and small-business bankruptcies in South Dakota and beyond in the coming months that will be both a result and a cause of a wider economic crisis spurred by the coronavirus.

So far, federal aid and unemployment programs, and several months of restricted access to the court system, have delayed a rise in bankruptcies from showing up in court filings.

But increased rates of unemployment, reduced incomes of people at all levels of the economy and a coming debt crisis will all play a role in the anticipated bankruptcy storm that could affect a wide range of individuals and businesses, including people who long saw themselves as financially stable, said Breck Miller, community relations director for Lutheran Social Services Center for Financial Resources in Sioux Falls.

It would not surprise me at all if we do see an increase in the number of bankruptcy filings, Miller said. The pandemic really put a lot of people in a financial bind, and I think its going to strike across the demographics. Its not just a low-income thing.

Federally backed financial assistance programs have helped keep food on many familys tables during the pandemic and have so far helped many of the hardest-hit South Dakotans stave off bankruptcy.

Mortgage forbearance, which allows for a delay or reduction in house payments, was granted as part of the federal CARES Act, and helped some homeowners manage debt. Temporary aid was also provided through new payment options from credit-card companies, and some borrowers were granted a pause in student loan payments.

But as federal assistance programs expire, and private lenders start seeking back payments on home and car loans, experts say many people in financially vulnerable positions will soon find that the debt they took on during the worst of the pandemic has become too much to handle.

Mortgage payments delayed through forbearance still must be paid, sometimes as soon as the forbearance period ends. A homeowner could be on the hook for hundreds or even thousands of dollars in back payments that must be made and carry the risk of defaulting on loans.

Back payments alone will drive more people to seek bankruptcy protections in the coming months, said Clair Gerry, a bankruptcy attorney from Sioux Falls.

For that reason alone I would expect to see a big uptick in Chapter 13s, Gerry said of the personal bankruptcy filings.

As of late July, 16,000 South Dakota residents were unemployed, and many were forced to turn to credit cards or drawing down savings to survive, Miller said. As of August, those unemployed workers lost the $600 weekly enhanced unemployment benefit created by Congress as part of its pandemic relief efforts.

A rising wave of bankruptcies could lengthen the pandemics economic recession as small businesses and consumers struggle to restructure their debts or sell off what they own or write off debts they cant pay. The burden has already been immense for many families at all income levels in South Dakota, many of whom have said they couldnt withstand an unexpected $400 expense without taking on more debt even before COVID-19 hit.

Consumer spending, meanwhile, is sure to fall and the economy overall will suffer, said Joe Mahon, an economist and outreach director at the Minneapolis Federal Reserve Bank.

Think of all those people who lost their jobs and lost their incomes, Mahon said. Even with the unemployment benefits that they might have been receiving, theyre probably thinking more about hanging on to their discretionary money rather than going out and spending on appliances and clothing and things like that.

If consumers are stuck paying off debts, they cant spend their money at local businesses, many of which also took on additional debt to survive the pandemic. That will result in fewer job openings for people trying to return to work as their unemployment runs out and the economy continues to open up.

Exactly when the bankruptcy bomb will go off is anybodys guess at this point, economists and bankruptcy experts say, but they worry it is only a matter of time before filings rise rapidly.

I just know theres a storm looming, Gerry said. Everybody is predicting that theres going to be a lot of bankruptcies filed by fall or winter.

So far, 2020 has been a relatively slow year for bankruptcy courts. Nationwide, total bankruptcy filings were down about 23% compared to the first six months of 2019. In South Dakota, by the end of July, bankruptcy filings were down about 16% compared to the first seven months of 2019, said South Dakota Bankruptcy Court clerk Frederick Entwistle.

Bankruptcy attorneys and financial counselors have recommended to clients that they hold off on filing for bankruptcy until the worst of their financial losses have ended. Often, that meant waiting until finding a job and figuring out what their new monthly income would be. If an individual files for bankruptcy but has to keep living off of credit cards or other forms of debt, any debt incurred after the initial filing wont be discharged or reorganized as part of the bankruptcy proceeding.

South Dakotans, in general, also tend to avoid bankruptcy. The state currently ranks 45th lowest in the per-capita rate of bankruptcy filings out of the 50 states and has had one of the lowest per-capita bankruptcy filing rates for more than a decade. Over the past five years, there have been fewer than 1,100 personal bankruptcies filed in the state each year. In 2019, just 964 people or married couples filed for either chapter 7 or chapter 13 bankruptcy.

Recessions, though, tend to push people beyond their financial limits faster and farther than they can cope with. In 2010, when the effects of the Great Recession of 2008 peaked in South Dakota, 2,000 people filed for bankruptcy protection, nearly double the number from before the Great Recession began.

COVID-19 also came at a time when farmers and ranchers, South Dakotas economic bedrock, were struggling against a trade war and low prices for grain, soybeans and cattle. In fact, January and February of 2020 saw overall bankruptcy filings in South Dakota increase over the same period in 2019 due to a jump in farm bankruptcies, said Gerry.

Much of what happens over the next few months will depend on what Congress comes up with as far as economic stimulus, and how long it takes those currently unemployed to get back to work. Avoiding a surge in bankruptcies, though, will take a lot more stimulus and far faster employment and wage growth than is likely to occur.

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COVID Worry: Experts Say Wave Of Bankruptcies Likely In SD - Yankton Daily Press