We will see some major chains go away and not come back. These are chains that were struggling before the situation. COVID-19 will put them over the ledge.
Here are just a few recent bankruptcies caused by the coronavirus pandemic:
Los Angeles-based casual restaurant chain California Pizza Kitchen, better known simply as CPK, is now officially in chapter 11 bankruptcy as a result of the ongoing economic downturn fueled by the global coronavirus pandemic.
Ascena Retail Group, the owner of Ann Taylor and Lane Bryant, finally filed for bankruptcy protection on Thursday.
Regional retailer Paper Store filed for Chapter 11 earlier this month. The operator of 86 stationary and card stores in the Northeast said it’s looking for a buyer.
New York & Co. parent company RTW Retailwinds also filed for Chapter 11 bankruptcy protection this month after years of growing irrelevance in malls. The women’s apparel company — which changed its name to the bizarre RTW Retailwinds as part of a rebranding in 2018 — operates 378 outlet and and mall-based stores across 32 states.
Brooks Brothers filed for bankruptcy this month as well. It has been dealt a twin blow to its finance from closed malls and a shift away from preppy clothing.
GNC, the 85-year-old vitamin seller filed for bankruptcy in late June after years of battling waning sales and a debt load north of $1 billion. GNC plans to close 1,200 stores across the U.S.
It’s not just retailers, entire cities are in trouble too.
The pandemic will reduce local government revenues by an estimated US$11.6 billion in 2020. With COVID-19 requiring residents to stay home and stores to shutter, the bulk of this reduction comes from a slump in local sales taxes. Declines will continue into 2021.
Many U.S. cities will need to rely on help from the federal government. Aid to cities may be part of the next pandemic aid package now being discussed by members of the House and Senate. But so far, the Republicans’ bill leaves out any new funding for state and local governments, while the Democrats’ bill includes $1 trillion for it.
The coronavirus crisis has throttled economic growth and dragged down corporate profits. The U.S. has also seen a cascade of bankruptcies since the onset of the pandemic. Lisa Abramowicz looks at what’s driving the distress on corporate balance sheets.