The current crisis has left many retailers, both large and small, trying to figure out how to best configure themselves in what has now become the new retail environment. Surviving means cutting expenses to the bare minimum, negotiation concessions on debt re-payment obligations from lenders, and pursuing all available government stimulus programs.
This global pandemic has truly accelerated and exacerbated the problems for many struggling retailers. Even before the coronavirus crisis forced stores to close, many retailers were already struggling to service their debts. While online sales are reportedly rising during the quarantine, the increase is simply not enough to compensate for lost store sales. At this time, every retailer and every other business forced to close, should be taking advantage of whatever grace periods and extensions are available.
Retailers should take the cue from well-known department store company, JCPenney, who is wise to be deferring capital expenditures, drawing on lines of credit, and cutting spending wherever possible. These times require true financial flexibility, and most businesses will find that they have to stretch beyond their prior capabilities.
Before they reach their limits, these businesses should be consulting with experienced insolvency counsel to develop strategies and explore all options available. Those conversations should start now, when reorganization is still a viable alternative to liquidation.
If you have questions about options available to your business, please contact one of Bast Amron’s Insolvency Litigators.