Bankruptcy Watch II

July 18, 2020

[Updated from time to time – Last update July 18, 2020].

July 20 Update

The hits keep coming.

BJ Services (a fracking company) filed for Chapter 11

BBS – A German wheel manufacturer. Apparently the third time it has declared bankruptcy (reassuring for those who think Bankruptcy is always fatal!)

July 18 Update

Much of my data between early May and early July was wiped out by a change in the WordPress software (or possibly user error, but why not blame a faceless corporation!)

A large number of companies have started to walk over the edge, and there is great expectation that number will increase when the protection of the CARES act in the US and CERB/CEWS in Canada comes to an end.

Here are some newly minted bankruptcy filings:

Toys, Toys, Toys – A well known toy retailer based near Toronto, Ontario

California Resources – A large oil driller in California

CBL & Associates Properties – The owner of more than 100 shopping malls across the US.

Without the details here are some that have failed recently (descriptions lost when my system reverted to an older version!)

Chesapeake Energy – After years of speculation, finally failed

Brooks Brothers – will close at least 51 stores.  They had about 4,000 employees prior to bankruptcy.

Hi-Crush – A company providing frac-sand to the fracking industry (fracking is a process used in the shale drilling revolution).

Hytera – A technology company making two way radios, may simply be trying to avoid a court judgement beneficial to Motorola and may not be related to a drop in demand due to COVID-19.

Hertz

Gold’s Gym

Tuesday Morning 

GNC

CEC (Chuck E. Cheese)

Cirque du Soleil

Lucky Brand (clothing, not cigarettes)

David’s Tea – Canadian Tea retailer.

Muji (US)

Ascena Retail Group (Ann Taylor and Lane Bryant)

Overall, there are just so, many rolling in now it would be hard to keep up with them particularly without highlighting their relative importance, staff sizes and other relevant data. Here are some others: Bruin E&P, Aeromexico, Lilis Energy, RTW Retailwinds, The Paper Store, Papyrus.

July 9th Update

I have been updating this list of notable bankruptcies for many weeks now, and somewhere along the way, the last six weeks disappeared.   Not to worry.  Today Bloomberg posted an article showing US bankruptcies with a much nicer graphic than mine [Click this sentence to see the article].

This week has been kind of stunning, with Brooks Brothers, Lucky Brands, Sur La Table, Endologix, NPC International all failing over the past few days.

It is worth noting that these are only the companies that are ‘notable’. All the little restaurants and bars and garden companies and sewing stores and hair dressers…etc. are not really discussed. In many cases, they don’t even have enough money to pay for a bankruptcy filing.

Here is my old post and updates from about six weeks ago . . . I will try to find all of my lost work.

A list of some notable bankruptcy cases.

[May 10th, 2020 update] Note that a May 5th report from American Bankruptcy Institute shows a dramatic drop in personal and corporate bankruptcy in April 2020.  This is counter intuitive and most experts believe that filings will increase dramatically once consumers and businesses have received grants and loans from the CARES act in the US.  Meanwhile Chapter 11 filings which are technically restructuring (J.Crew and Neiman Marcus, etc) are up 26% year over year.

Fairfield, Alabama – May 19th – A small city, with a relatively small balance sheet (<$10 million) but it’s just a peek into what is to come.   The city cites drops in revenue and economic forces beyond its control.   The Muni bond market in the US is in dire straits and the fallout will impact investors as well as those who are reliant on the municipalities such as retirees and workers.

Reitmans – May 19th – There goes another iconic Canadian brand.  They had 576 stores under brands of Reitmans, Penningtons, RW & Co., Addition Elle and Thyme Maternity.

Centric Brands – May 19th – Publicly traded (CTRC), Centric is not a household name, but they make goods sold by Tommy Hilfiger, Under Armour and about 100 other companies.   They will be taken over by private equity.

Pier 1 – May 19th – Pier 1 Imports has called it quits– They have reorganized a number of times, but this time, they are done.  After trying to find a buyer, they have given up and will begin an ‘orderly wind down’ of their operations.

IntelSat – May 13th – Provider of satellite services goes bust.   The company currently has about $15 billion in debt.  They will be refinanced though, but its another business that can’t get enough of a return on the capital used to even pay for it’s operations.  Luxembourg based company but trades on NYSE. ~1200 employees.

Stage Stores – May 10th – unable to get financing.

JC Penney – May 19th – Bankruptcy filing was made over the weekend.  Reuters says a Chapter 11 filing is imminent with a closing of 200 of it’s 850 stores stores.  Debt of almost $4 billion and 85,000 employees.  With a quarter of the stores closing, that should imply about 20,000 jobs completely disappearing.  They have already missed at least two large payments.

Aldo Group – May 7th – Sought court protection this afternoon in Montreal.  3,000 stores worldwide.  Estimated employee count – 25,000.  Company is not public

Neiman Marcus – May 7, 2020 – Filed for bankruptcy.   ~14,000 employees, $5 billion in debt.  Working on deal with PIMCO.  Seeking to keep most of their stores open (!).  40 namesake stores, 2 Bergdorf Goodman stores and ~24 Last Call stores.  Also owns Mytheresa online store.

Lord & Taylor – May 5 – No filing yet – Announced May 5th that they will liquidate their stock upon reopening of stores.  This is certainly in preparation for a bankruptcy filing.  HBC on the hook for rents after selling the brand.

J. Crew – May 4, 2020 – Restructured $1.65 billion of debt into equity and a new $400MM credit line.  The company operated 182 J. Crew-branded stores, 140 Madewell stores and 170 factory stores as of March 2, according to recent filings.   (business name is Chinos Holdings)

Foodora – April 30, 2020 – Canadian food delivery company owes $4.7M to restaurants (as if they don’t have enough problems) out of at least $250MM in liabilities.  Staff count unknown, but likely 500-1000.  The delivery crew were given permission to unionize, some say this act marked the end of the company. [Note the broarder issue here, that the gig economy survives on low paid workers without protections offered by other employers.   The calls for higher wages (or union style protection) makes these operations unprofitable.  For the gig workers, these jobs are at best, an economic necessity and at worst it is close to modern slavery. ]

True Religion – April 13, 2020 – Makes super expensive denim wear.  They have filed for bankruptcy before, but this time it might be for good.

APEX Parks Group – April 8, 2020 – Entertainment centers and water parks.  It looks to be working to keep the assets and re-open.  $100MM to $500MM in debts.  Will be purchased from Carlyle and sold to Cerberus, a different private equity group.

Quorum Health – April 6, 2020 – A hospital operator based in Tennessee but with 24 hospitals around the US.  $1.26 billion owed with just $300 million in assets.

JetSuite – April 30, 2020 – a private jet service in Texas.  This is a relatively small filing, but interesting as there was a boom in private jet usage as commercial flying became very risky at the start of the COVID-19 outbreak.  Since then business apparently hasn’t been very good.

Frontier Communications – April 14, 2020 – $11 billion in debt, about 21,000 employees (2018).

Chesapeake Energy – May 2, 2020 – They haven’t filed yet, but it appears that this is the last straw for the company which has been on a downward spiral for almost a decade due to . . . yep, you guessed it, massive debt and declining asset prices.   They tried to take advantage of shale drilling, but they were so successful that they forced the price of natural gas, and then oil down to all time lows making their debt an impossible weight.  In 2019 they had about 2,300 employees, down from about 12,000 in 2011 when things started to fall apart.

Brooks Brothers – No filing yet, but looking for a buyer to avoid bankruptcy.

Hertz – No filing yet – Missed lease payments on April 27th for vehicles and seeking to restructure terms.  Looks like they cover most major brands of cars, (Chrysler, Ford,  Hyundai, Toyota and Volkswagen).  Hertz received forbearance until May 22nd to come up with a plan.

Macy’s – Trying to raise $5 billion to avoid bankruptcy

Nordstrom – No filing yet

Dillard’s – No filing yet

Kohls – No filing yet

Signet (Kay Jewelers, Jared, Piercing Pagoda) – (NYSE:SIG) – This looks like it can avoid bankruptcy – 3,208 stores and 26,126 employees.  Debts are relatively low actually, with about $1.2 billion in debts, but their rent is about $500 million per year.  They ended 2019 with $374 million in cash and $1.1 billion available credit.

Tapestry (Coach, Kate Spade, Stuart Weitzman) – No noise or filing for Tapestry – Another company that looks okay in the short term.  With over a billion in cash and short term investments, they can weather 3-6 months without bankruptcy.   Their quarterly lease costs are about $330 million.

Capri Holdings (Michael Kors, Versace, Jimmy Choo) – No noise or filing for Capri – $237mm in cash, $400mm in quarterly operating leases, part of a total of $2.3 billion in near term liabilities and a further $3.3 billion in long term liabilities.  This company may be closer to the brink of disaster than Signet or Tapestry.

Norwegian Cruise Line – May 5, 2020 – Issues a warning that there is substantial doubt that it can continue as a going concern.   This is an accounting/legal term that means they can’t forsee paying their bills beyond 12 months.  May 11 – The company arranged $860MM in new debt at 6.00%.  Bankruptcy watch is off for the immediate future.

2 thoughts on “Bankruptcy Watch II”

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s