Bankruptcy is one word that no company likes to hear, but it is a bitter truth. Every year there are always some companies that go bankrupt or show signs of bankruptcy. Some of these companies are known names while some you may never have heard of. Discussed below are the bankrupt companies that filed for bankruptcy recently and those that may go bankrupt soon.
The first in the list of bankrupt companies is Lucky’s Market, which is a grocery chain that refers to itself as “organic for the 99%.” On Monday, Lucky’s Market filed for bankruptcy protection, adding to the list of grocery store bankruptcies. Last week, it revealed plans to close over 30 stores in the country. As per the grocery store, it plans to sell six stores to Aldi and five to Publix. The company will continue to operate seven stores through bankruptcy.
Another company that filed for bankruptcy protection earlier this week was American Blue Ribbon Holdings, which is the parent company of the Colorado-born diner chain, Village Inn. The diner chain recently closed six Front Range locations. In its filing, American Blue Ribbon said that it laid off 1,100 employees because of store closings and its financial woes.
Joel Greenblatt Owned Hedge Fund On Why Value Investing Isn’t Working Now
Acacia Capital was up 12.27% for the second quarter, although it remains in the red for the year because of how difficult the first quarter was. The fund is down 14.25% for the first half of the year. Q2 2020 hedge fund letters, conferences and more Top five holdings Acacia's top five holdings accounted for Read More
A report from the Tribune notes that “gastrobar” chain Bar Louie also filed for Chapter 11 bankruptcy. Bar Louie, which was founded 30 years back in Chicago, shuttered about 38 corporate-owned locations over the weekend. As per its bankruptcy filing, the company has over $100 million in debt. The primary reason for the closure of stores is believed to be slowing sales.
Companies that may go bankrupt
Now, here are the companies that may file for bankruptcy this year.
Pier 1 Imports – it was a go-to name for shoppers looking for a unique product. Now, buyers can get those items online as well. An earlier report from CNBC noted that the company plans to close about half of its 936 stores and slash 40% of its headquarters staff. The company has been witnessing dropping sales for the last few quarters, and for the third quarter, it reported a loss of $59 million.
Bed Bath & Beyond – the retailer reportedly plans to close about 60 stores this year. The company’s stock has dropped from $70.00 in 2013 to $7.34 in 2019. It is believed that the company is unable to compete with online retailers.
GameStop – as per a report from Retail Dive, the company had plans to shutter about 200 of its 5,000 stores globally. The company reported a 14% drop in global sales in the second quarter last year.
JCPenney – even though the company was able to stabilize its profits in 2019, a report from Business Insider notes that the company is still struggling to create an experience for the customers. The company, which is about 117-years old, has over $4 billion in debt and most of it falls due in 2021.
Apart from these names, others that may fall on the list of bankrupt companies are Stein Mart, Rite Aid, Crew, Francesca’s, Ascena Retail Group and Fairway Markets.
Sectors to avoid
The first sector to watch for bankrupt companies is the U.S. retail sector. Since 2008, about one in ten listed companies in the sector has gone bankrupt. Additionally, the value of shopping malls has dropped by about 30% in the last three years.
A report from Financial Times, citing two industry reports, notes that about half of the department stores in malls may close in addition to 500,000 retail jobs cuts by 2025. The rise of ecommerce could be blamed for such turmoil as it has benefitted only a small number of companies, but has hurt the profitability across the sector.
Apart from groceries and retail, bankruptcies are also pretty common in the energy sector. Over the past five years, over 200 North American and gas producers have filed for bankruptcy. Over 100 bankruptcy filings were seen in 2015 and 2016 during the crash in oil prices. In 2017 and 2018, the pressure on companies eased with the recovery in oil prices. There were 24 bankruptcy filings in 2017 while in 2018 the number was 28.
However, the oil prices slumped again in the fourth quarter of 2018, resulting in an increase in the number of bankruptcies in the following year. As per the data from law firm Haynes and Boone, about 42 oil companies filed for bankruptcy in 2019.
Of the total bankruptcy filings over the past five-year period, 94 were from Texas, 11 each from Colorado and Louisiana and 10 from New York. Canada had about 18 oil and gas producer bankruptcy filings.
Going forward, the law firm expects 2020 to be another rough year for the oil and gas producers, owing to a numbers of factors, such as the coronavirus outbreak and political tensions in the Middle East.