Has Your Favorite Store Filed for Bankruptcy?
The number of companies filing for bankruptcy has increased dramatically since the onset of the COVID-19 pandemic. According to The New York Times, the number of Chapter 11 filings soared in May 2020 by almost 50% compared to the number filed in May 2019. With this many filings in so short a time, odds are very high that one of your favorite brands has sent lawyers to bankruptcy court to seek protection.
Of course, filing for bankruptcy protection does not mean that a company will automatically shut down for good. One of the purposes of Chapter 11 is to allow a debtor to remain in business while it restructures its debts. If a company was really going out of business, it would have filed for Chapter 7 liquidation instead. In other situations, the company might simply be bought by a rival.
What should you do if a favorite company is in the news for filing for bankruptcy? Below, we offer some tips.
Redeem Your Gift Cards While You Can
When Toys ‘R Us decided to close, it announced that customers had only one month to use any gift cards. If you waited too long, then those cards were worthless.
Now is the time to use your cards, even if the company has only filed for Chapter 11. Sometimes, Chapter 11 bankruptcies don’t work out and a company might be forced to liquidate. In other situations, a company in Chapter 11 might shut down a store near you, which makes it harder to use gift cards, especially if you aren’t keen on traveling. A good motto is: use them or lose them.
Shop Liquidation Sales Carefully
When a company liquidates, it usually aggressively advertises “Everything Must Go” sales. As Lifehacker notes, however, this does not always mean that you are getting great deals. Some companies mark up their merchandise anyway, so the initial 20% discount probably does not represent much of a sale.
As the store approaches the date of closure, however, the size of the discount often increases. Those who are patient often realize much larger savings. Sit tight and pay close attention to media reports of when the company is really shutting its doors.
If the company has filed a Chapter 11, then it might not have any sales, even if the store near you is closing. Instead, the company might transfer merchandise to other stores that will remain open.
Realize also that the company probably has a “no returns” policy for liquidation sales. If you aren’t 100% sure that you want something, then there is no reason to buy it. Also, if you bought something before the company filed for bankruptcy that you want to return, reach out to the store as soon as possible.
Bankruptcy Advice for Your Business
The South Florida economy has not been immune to the recent economic downturn. If your small or family business is struggling, we can discuss your options. We have over 40 years of combined experience with liquidations and Chapter 11 bankruptcies. Contact our Plantation bankruptcy attorneys at Nowack & Olson, PLLC today to schedule your initial consultation.