Bankruptcy

Bankruptcy

Anticipating the Next Wave Of Retail Bankruptcies

Amid the current lull in restructurings, lenders watch for warning signs after stimulus funds dry up and the pandemic persists.

5/6/2021 1:40:00 AM

Amid the current lull in restructurings, lenders watch for warning signs after stimulus funds dry up and the pandemic persists.

Amid the current lull in restructurings, lenders watch for warning signs after stimulus funds dry up and the pandemic persists.

But a combination of factors has led to an extended lull in restructurings, as lenders nonetheless remain wary of signs of trouble. A recent report by S&P Global Market Intelligence cited “Government stimulus, low interest rates and flexible lenders” as some of the reasons for the relatively stagnant pace of filings — about 155 companies have filed for bankruptcy in 2021, compared to 180 in the same period last year, according to an  S&P Global Market Intelligence report in late April. 

Exodus of election officials raises concerns of partisanship Ned Beatty, indelible in 'Deliverance,' 'Network' dies at 83 NASA to Air Briefing, Spacewalks to Install New Station Solar Arrays

Just about a dozen of those have involved U.S. retail bankruptcies since the start of the year to mid-April, according to data from S&P Global Market Intelligence. But if companies hit trouble accessing financing to pay vendors or to keep their operations on pace, it could set off a cascade effect, experts said.   

“Borrowers are currently able to get access to financing to extend the runway, but if there’s a climb in rates, or otherwise tightening on the ready access to capital, then you’re going to see a relatively significant spike in defaults,” said Justin Bernbrock, partner in Sheppard Mullin LLP’s finance and bankruptcy practice group.  headtopics.com

View Gallery Related Gallery Fall 2021 Collections: Cocoon Chic“I think, particularly as it relates to the retail industry, there’s now also a fair amount of pent-up consumer demand,” he added. “I think that to some extent, there’s going to be almost a bridge period, where some retailers are going to be propped up by this outpouring of consumer desire to go to a store and try on a pair of jeans.” 

Lenders are also continuing to monitor covenants to ensure that the businesses are complying with their terms, bankruptcy watchers said. Lines of credit, for instance, are gauged based on accounts receivable, which if they decline, can jeopardize the line of credit and affect a company’s ability to borrow. 

“As that line of credit availability decreases, your ability to use that line of credit to pay for supplies, etc. will also be an issue,” said Nanette Heide, a partner in Duane Morris LLP’s corporate practice group. Ongoing stimulus funding through landmark measures including the $1.9 trillion American Rescue Plan, which also boosted the Paycheck Protection Program meant to provide forgivable loans to companies, have helped keep some retailers afloat.

In addition, tweaks to aspects of the bankruptcy code, made in part through COVID-19 stimulus measures, have helped smaller retailers by making the process more accessible and affordable for companies with lower amounts of debt, and making the Chapter 11 process a relatively painless vehicle for recovery. Furla USA, for instance, had used the fairly new subchapter 5 provision of the bankruptcy code to execute a relatively quick restructuring within three months.  headtopics.com

Border Patrol discovers 'inhumane' stash house in Texas with over 100 undocumented immigrants, officials say Djokovic Approaches Federer And Nadal's Record With French Open Win Relax to these sounds of nature - CNN Video

“When that faucet is turned off, you’ll see more significant impact on businesses that were relying on that money, that aren’t recovering as quickly as they would like to,” said Heide, referring to life for companies after stimulus funds dry up. 

Read more: WWD »

Decoding the Queen's colorful style

As Britain's longest-reigning monarch, the Queen is both a cherished and consistent part of public life -- her image synonymous with stability and tradition to the British people.

Dogecoin’s 12,000% Rally Spurs Hunt for Next Crypto WinnerThe cryptocurrency saw a more than 12,000% rally this year and Bitcoin climbed briefly to over $60,000 apiece last month, prompting investors to turn their attention to newer digital assets like DigiByte, VeChain and SafeMoon in the hunt for cheaper alternatives that may be the next to skyrocket. You mean the next pump and dump? hello, new friends! safemoon Safemoon safestar of course the next big thing

WSJ News Exclusive | KKR to Invest in Charter Next Generation, Joining Leonard GreenKKR is investing in Charter Next Generation, joining fellow private-equity firm Leonard Green as an equal owner of the specialty-films business and pledging to give all of its employees stock too

Molly Bernard Wants Her Next Project to Scare Her.bollymernard opens up about her new film, shedding anxiety on set, and lessons she's learned from the YoungerTV cast.

The 50 Next Awards: World’s 50 Best Names The Future Of GastronomyThe World’s 50 Best announced its latest list: the inaugural 50 Next awards, an initiative celebrating for the future stars in the gastronomical galaxy. Am so delighted to share this, investing on Bitcoin has been so wonderful with the help of Mr Rene who have been doing all the trading. I invested $5000 and in two weeks I have earned $20,000. Trust me this is the best investment platform, contact the Admin 👇👇👇 abrantesrene

Los Angeles Times Picks ESPN’s Kevin Merida as Next Top EditorThe Los Angeles Times named Kevin Merida, who now leads The Undefeated, as its new executive editor, as the publication looks to raise its profile and jump-start digital growth