After Bankruptcy, Nearly Half of Retailers Close All Stores - ABI

Fitch Ratings research found that secured creditors are recovering all or most of their investments when retailers file for bankruptcy protection, even as nearly half these companies don’t survive with a physical presence, the Wall Street Journal reported. Among large retail and supermarket chains that filed for bankruptcy protection over the past 15 years, 45 percent closed all of their stores, the ratings firm said in a new report. Fitch found that the bankruptcies of 25 out of 55 retail and supermarket companies ended in liquidations. High debt balances and lease and interest payments are some of the headwinds driving retailers into bankruptcy, Fitch said. They can also suffer from insufficient investments in operations and problems with cash flows and liquidity. At the same time, some troubled big retailers had a hard time accessing trade credit, such as Sears Holdings Corp., Toys “R” Us Inc. and Gordmans Stores Inc. Inventory suppliers demanded cash on delivery, cash in advance or a letter of credit to guarantee payment for goods. ABI

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