Countless Corporations File for Bankruptcy During Pandemic

Business man worried, filing for bankruptcy.

The global pandemic has seemingly deconstructed the business community beyond the point of reorganization into the depths of ruin. An initial run of temporary layoffs and business closures has transitioned into a permanence of unemployment and corporate closures that mark a new era of economic downturn.    

Early May brought a beginning wave of corporate bankruptcies from some of the most well known, established brands in the world, signaling dangers ahead for large and small businesses alike, and a desperate need for an escape plan. 

Georgia bankruptcy attorneys reassure that there are lessons to be learned from mega-corporations filing Chapter 11 bankruptcy. Struggling businesses in Georgia and other states have similar access to bankruptcy protection as their mega-corporate counterparts. 

Why Are Corporations Filing Bankruptcy?

In recent years, the financial marketplace has brought historically low interest rates, enticing many to borrow against future earrings on the promise of low loan repayments. The allure of cheap money was particularly strong for major retailers accustomed to leveraging low interest rates and substantial debt during times of restructuring and expansion. 

As noted by Dallas Federal Reserve President Robert Kaplan, however, there were “dangers of ballooning corporate debt long before the pandemic triggered an economic catastrophe”.

What no one could have accounted for was the unpredictable and abrupt halt to earnings resulting from a global pandemic. Companies who had over-extended were poorly positioned to weather the economic shutdown, even in the short-term. 

Without incoming revenue, corporations were unable to make payments toward necessary operating expenses such as utilities, payroll, insurance, and lease obligations, notwithstanding an inability to repay their loan obligations. 

Filing Chapter 11 Bankruptcy was the only remaining option. 

The Lessons of Neiman Marcus, J.Crew, and Dean and Deluca

Neiman Marcus, J. Crew, and Dean and Deluca all tell a valuable tale of using Chapter 11 bankruptcy to restructure debt and emerge again after the financial devastation caused by the COVID-19 global pandemic. 

These mega-corporations have expert legal counsel guiding their decisions toward bankruptcy. They likely considered many options and resources before filing Chapter 11. 

Like Neiman Marcus, J. Crew, and Dean and Deluca, keep your eye on the future and seek the assistance of a professional bankruptcy attorney who can guide you through Chapter 11 bankruptcy for a better future.

Saving Your Business in the Face of the Pandemic, 3 Practical Tips:

Stay informed of COVID-19 Business Relief Legislation 

The federal government is continuously working to address the needs of corporations and small businesses during this unprecedented time. Check the Small Business Administration website regularly for updates that may impact you. 

Take advantage of government relief funding or small business loans 

Temporary loans can help you weather the loss of income.  Apply sooner than later and while funds remain available. 

Consult a Financial Advisor and Bankruptcy Attorney 

As you proactively consider the future of your business, you must seek professional counsel. Government loans and grants will be helpful for a little while, but it is vital to look beyond temporary relief toward long-term solutions.

Chapter 11 bankruptcy may be the only way to keep your business operational. In 2019, the SBRA was created to make bankruptcy an easier and affordable option for small business owners needing relief and reorganization opportunities. Chapter 11 can help a debtor balance income and expenses while regaining profitability and paying down accrued debt. 

Local Georgia Bankruptcy Attorneys Can Help During the Pandemic

If you are a Georgia business owner affected by the global pandemic, reach out to a bankruptcy attorney today.  Your local Georgia bankruptcy attorney should be part of a proactive approach to emerging from this crisis as a once again profitable business.

The countless corporations declaring bankruptcy during the pandemic have shown us that there is a rescue plan in the form of Chapter 11 bankruptcy. Contact our Georgia bankruptcy attorney today to find out how bankruptcy protection can help you.   

Posted in: Bankruptcy