Anthony Lupo and Aram Ordubegian Talk Bankruptcy in the Face of the 'Retail Apocalypse'
It's no secret that 2017 has been a particularly difficult and troubling year for the retail industry. Changing consumer preferences and attitudes, the need for rapid and convenient shopping solutions, and a surge in online shopping offer some insight as to why the landscape has been evolving so rapidly...and why the retail sector has been hit so hard. Referred to as the 'retail apocalypse,' this year alone has seen over 300 retailers filing for bankruptcy and over 6,400 well-known stores closing their doors forever.
In this episode of Fashion Counsel, Arent Fox partners Anthony Lupo and Aram Ordubegian discuss the different routes a struggling retailer can take. Undergoing a company "work out" process may reveal many of the issues, from burdensome contracts and leases to asset transfers and new value contributions, without the ineluctable attention and stigma that come with a public bankruptcy filing.
But at the eleventh hour, declaring bankruptcy is sometimes the best (and only) option. Filing for Chapter 11 allows a company to continue operating while it restructures its debt, a strategy that some companies, such as BCBG, have found to be successful. While it's certainly an indicator that business has gone south, it's also a last-ditch means for the company to buy itself some time and avoid shuttering its stores.
To watch the interview, visit Arent Fox's Fashion Counsel blog here.