Why Are U.S. Retail Reorganizations So Hard? | Article

Why Are U.S. Retail Reorganizations So Hard?

Corporate Finance & Restructuring | ABI Journal (Reprint)

October 19, 2016

Retail Liquidation

Why are so many leading-name retailers choosing to end in liquidation?

In the past few years, it has become an accepted narrative that troubled retail chains have difficulty reorganizing and end in liquidation rather than surface again as reorganized businesses. Has the Bankruptcy Abuse Prevention and Consumer Protection Act been a key reason for this trend? How can you measure the frequency that failed retailers liquidate in comparison with other industries, and how does this data inform the difficulties facing retail debtor reorganization? There are notable distinctions between those debtors that survived and were able to reorganize and those that liquidated. In particular, retail debtors have difficulty reorganizing as compared to other industries.

This article analyzes all of these trends and concerns, and finds that identifying liquidation outcomes is not as straightforward as it may seem.

Posted with permission from American Bankruptcy Institute © 2016. All rights reserved.

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