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First Toys ‘R Us, Now Sears…Who’s Next?


The news that giant retailer Sears had filed for bankruptcy on October 15, 2018 should not have been surprising. For years, Sears and its subsidiary Kmart have been closing stores around the country. However, it is always an unsettling experience to watch one of the nation’s oldest retailers admit that it cannot pay its bills, which is what its Chapter 11 filing amounted to.

Whether Sears can emerge successfully from bankruptcy remains to be seen. Toys ‘R Us, after filing for bankruptcy liquidation, is trying to stage a comeback, and we wish them the best. In this article we identify the next large companies that could be filing for bankruptcy in the remainder of 2018 or in 2019.

  1. Crew Group, Inc.

American retailers continue to be overextended, especially in this day and age of online shopping. J. Crew caters to young people with its preppy styles, which is an audience increasingly less likely to shop in stores.

The company barely averted a bankruptcy in summer 2017 by convincing investors to agree to a bond swap. Unfortunately, this type of maneuver is no guarantee to help a company in the long term. Toys ‘R Us, for example, undertook a similar swap but ended up filing for bankruptcy anyway.

PetSmart Inc.

People will always have pets, but they might be buying pet supplies from PetSmart much longer. Drowning in $8 billion of debt, the company hired a restructuring advisor in June 2018. At the same time, profits have been lagging for the retailer as consumers buy more pet supplies online.

Neiman Marcus Group

Retailer Neiman Marcus has been in the news for a possible bankruptcy for a while now. The company did not help itself when it hired a debt restructuring adviser in early 2017. At the time, the company’s debt was approaching almost $5 billion. Of course, the company claimed that bankruptcy was not on the horizon, and it has yet to file. Perhaps it has been successful restructuring its debt.

Guitar Center

For years, the media has been reporting that Guitar Center has been on the cusp of bankruptcy. The problem? Too much debt. (What else?) The company had over $1 billion in debt from its leveraged buyout over a decade ago. In April 2018, S&P Global Ratings lowered the company’s credit rating to “selective default,” a sure sign the company was about to file for bankruptcy. The chain sells musical equipment and supplies to budding musicians, and demand has been waning.

However, as reported by the L.A. Times, the company might be turning a corner. It recently refinanced its debt to more favorable terms, giving it some breathing room. Management also devised a plan for the company to provide services that are more profitable, and same-store sales have increased somewhat over the past year.

Contact South Florida’s Premier Bankruptcy Firm

Bankruptcy strikes more than large companies. Individual consumers and small businesses can find themselves in financial distress as well. At Nowack & Olson in Plantation, we advise people about the best method of finding financial freedom. For more information, please contact us to schedule a free consultation, 866-907-2970.





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