When a business that most people know and love goes into bankruptcy, it can be a shock. Many do, though, when financial difficulties place too much of a strain on their organizations. A lack of in-store shopping, low profits and poor selection can all impact stores. That’s what may have happened with this retailer.
Take for example the Chapter 11 bankruptcy that J.C. Penney has filed for. With a current lull in the retail industry, the department store has taken a hit. The retailer, which has been in business for 118 years, said that it will be entering into Chapter 11 bankruptcy and close some of its stores. Presently, J.C. Penney runs around 850 stores around the United States. It provides work for approximately 90,000 people.
Some people who have watched the company go into bankruptcy argue that it won’t survive, even though it’s cutting back its debts and making plans to change its operations. It has nothing different to offer when compared to competitors, according to Retail Metrics, a research firm.
Many department stores have struggled in the last few years, especially with the increase in online shopping. Penney has been struggling with weak sales and heavy competition since the 1990s. This year, profits were down 64% from the same time in 2019.
Businesses that choose Chapter 11 bankruptcy may be able to restructure their debts and find a way to re-emerge profitably, but it is still a difficult situation to be in. If your business is struggling, you may want to talk with your attorney about Chapter 11 bankruptcy and if it can help you get back in the green.