Businesses going bankrupt due to COVID-19

In the past year, we’ve seen a wave of retail store bankruptcies and closings that seem to continue into our new year of 2021. The impact of the pandemic on the economy is still ongoing. Unfortunately, business was already tough before the pandemic when retailers faced a record number of permanent store closures in 2019. Amidst the pandemic of 2020, a new record of over 12,000 stores closed in the U.S. Even as the change from in-person to online shopping and curbside pickup was made, it was predicted that 2021 could be on pace to break the record for store closings.

As some businesses have been forced the difficult decision to close, the store closings have come in a variety of ways,  according to Steven Abrams on Offers.com:

-Temporary closings: Stores close their brick and mortar buildings temporarily and shift their efforts into their online stores.

-Permanently reducing locations: Many stores have had to close down some of their locations while keeping others open.

-Bankruptcy: Business is in financial trouble and needs to reconstruct its debts to continue. According to the terms of bankruptcy, businesses may have to liquidate assets, reduce services and even close some locations to cover costs.

-Going out of business: Retailers have to cease their operations entirely. They may need to file for Chapter 7 bankruptcy depending on their financial situation, which will consist of selling their assets to repay debts.

A few retailers and businesses that have recently closed stores include JCPenny, Macy’s and Godiva’s Chocolates. Here’s a quick overview of each.

JCPenny avoided liquidation as mall operators and Brookfield Property Partners have completed a purchase of the retailers. Earlier in the year, JCPenny announced plans of closing all six of its locations, and then most of its 840+ stores were temporarily closed as a result of the pandemic. The retailer has announced plans to permanently close 192 stores this year and a further 50 stores later in 2021, as part of their bankruptcy process. Over 130 stores had already started liquidation sales and recently revealed 13 more stores will permanently close after liquidation sales. The sales allow JCPenny to exit their Chapter 11 problem of bankruptcy.

 Macy’s, however, is still in business and in 2019, 25 store locations closed. The department store announced another 125 permanent store closings before the coronavirus pandemic. The company announced in Jan. 2021 that it will close 45 of its stores by mid-2021. All of Macy’s 775 locations are temporarily closed in response to the pandemic; continuing their sales virtually through their website. Many of the locations have opened, however, they are still following local pandemic guidelines.

Godiva Chocolatier is not going out of business, however, announced in Jan. 2021 that they would be permanently closing all of their locations in North America due to the pandemic. These closures will impact 128 Godiva stores in the U.S. and Canada. Godiva will nonetheless still be available through their website and wholesale. Godiva will continue to operate locations in Europe, Asia and the Middle East.