Retail, Pharma Most Active in Bankruptcy
Retailers began flocking into bankruptcy courts after the 2018 holiday shopping season, as at least a dozen notable retail companies filed for Chapter 11 in the first three months of this year.
Two retailers that were on Fitch Ratings’ list of likely bankruptcy filers for 2019—young women’s apparel store Charlotte Russe Inc. and plus-size apparel retailer Fullbeauty Brands Holdings Corp.—have already filed their petitions this year.
New York-based Fullbeauty, which along with Charlotte Russe submitted Chapter 11 petitions on Feb. 3, set a record by winning confirmation in less than 24 hours from filing. Fullbeauty continues to operate after its confirmation, while San Diego-based Charlotte Russe in March decided to shut down operations after accepting a liquidation bid at an auction.
Other major retailer bankruptcies in the first quarter included New York denim jeans company Diesel USA Inc. and home décor retailer Z Gallerie LLC, which both filed petitions in March. Diesel planned to restructure, while Gardena, Calif.-based Z Gallerie looked to sell its assets.
Discount footwear company Payless Holdings LLC, Highland Heights, Ohio, giftware retailer Things Remembered Inc. and home décor retailer Décor Holdings Inc., which operates Robert Allen Duralee Group, filed petitions in February. Topeka, Kan.,-based Payless and Things Remembered planned to liquidate and wind down operations, while Hauppauge, N.Y.-based Décor continues to operate.
Gardena, Calif., discount retailer National Stores Inc., which operated Factory 2-U, Fallas and Anna’s Linen stores, in January converted its bankruptcy case to Chapter 7 to liquidate its assets. Kansas City, Mo., specialty beauty retailer Beauty Brands LLC, which filed for Chapter 11 in January, also converted its case to Chapter 7 after selling its assets in February.
Specialty Retail Shops Holding Corp., which operates Green Bay, Wis.-based Shopko stores, filed its petition in January with plans to sell its assets, while San Francisco children’s clothing retailer Gymboree Group Inc. filed Chapter 11 to liquidate and wind down operations.
Pharmaceutical companies continued to struggle as several filed for bankruptcy in February, including Novum Pharma LLC, Avadel Specialty Pharmaceuticals LLC, Aradigm Corp., Immune Pharmaceuticals Inc. and Pernix Therapeutics Holdings Inc.
Aceto Corp., a manufacturer of pharmaceutical chemicals and ingredients, also filed for Chapter 11 in February with plans to sell its assets.
Oil and natural gas producers were not as active for Chapter 11 filings as expected in the first quarter as Fort Worth-based Weatherly Oil & Gas LLC was the only significant filer. Weatherly filed bankruptcy to liquidate its assets in several private sales after reaching a transaction support agreement with senior secured lenders and equity holders.
Financial services companies filed for bankruptcy as well in the first quarter. Lehman Brothers Holdings Inc. subsidiary Aurora Commerical Corp. in March filed Chapter 11 to address litigation and wind down its business affairs. Litigation also led Chicago auto lender Total Finance Investment Inc. to file bankruptcy in February.
Mortgage lender Ditech Holding Corp. returned to Chapter 11 in February to restructure after filing a year earlier
Several media-related companies filed Chapter 11 petitions in March as industry trends toward digital products continue, as oppose to printed publications.
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