The 61-year old Indianapolis-based appliance and electronics chain, HH Gregg, filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Southern District of Indiana. The company has struggled with declining sales for about four years. According to Reuters, HH Greg has a signed a term sheet with an unnamed party to purchase its assets, and it is expected to emerge from the bankruptcy process in approximately 60 days. Of its more than 220 stores, the company plans to operate about 130 normally throughout the restructuring process. It said last week it would shut 88 stores.
HH Gregg is just one of a number of retailers that are attempting to restructure/reduce debt, while also seeking a new footprint. In the last year, Sports Chalet, Sports Authority, EMS, Eastern Outfitters, Golfsmith, BCBG, Fairway Market, The Limited, and American Apparel have all gone the Chapter 11 route for this financial strategy.
As the demographics continue to change shopping habits, it appears that Chapter 11 bankruptcy filings will be more common over the next few years as retailers attempt to meet market challenges with an omni-channel approach – providing customer with a seamless shopping experience, whether the customer is shopping from a device, telephone, or at a bricks-and-mortar store.
Some retailers to watch for possible Chapter 11 filing this year include:
- Finish Line – the sports apparel closed 54 stores in 2016 and plans to close another 25 stores in 2017, according to indystar.com.
- Gander Mountain – the St. Paul based hunting and fishing chain, also known as America’s firearms superstore.
- Payless – FootWearNews.com recently reported several of Payless’ major vendor partners noted that the retailer is behind on its bills.
- Sears Holdings – recently, a number of Sears and Kmart stores began closing across the country. Further, Sears sold its valued Craftsman brand to Stanley Black & Decker, Inc.
- Claire’s Stores, Inc. – Clark’s places this chain on the watch list due to high outstanding debt.
- Rue21, Inc. – this retailer is facing tough competition in the youth retail market and hold high debt according to Clark’s.
- CVS – the company plans to eliminate roughly 300 jobs and close 200 stores, equal to about 5 percent of its outlets, according to The Wall Street Journal.
- Chico’s – the company announced it will close 120 stores in the next three years.
- American Eagle Outfitters – the company is slated to close 150 of its more than 1,000 stores by the end of 2017. Like a number of other “youth retailers,” the company has struggled recently according to the International Business Times.
- Office Depot – antitrust concerns derailed a merger with Staples in May. Since then, the company announced it would close about 300 more stores in the next three years, according to Fortune.
- The Children’s Place – another 200 stores are slated to close in 2017, according to chainstorage.com.
If you are a landlord with one of these tenants or if you have questions on how best to protect your center, Stark & Stark’s Bankruptcy & Creditor’s Rights Group can help. Our bankruptcy attorneys regularly represent landlords throughout the country, including recently in the District of New Jersey, Southern District of New York, District of Delaware and Eastern District of Pennsylvania on a variety of issues. Most recently, our Group has represented landlords and trade creditors in the EMS, Golfsmith, RadioShack, A&P, Joyce Leslie and Sports Authority Chapter 11 bankruptcy cases.
For more information feel free to contact the author of this blog.