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Recession leads independent business into Chapter 7 bankruptcy

Freeman’s Men Shop, a privately owned men’s retail shop with two locations, recently filed for Chapter 7 bankruptcy. Both of the shops are now closed, which some industry experts say is a growing trend after the recession as more consumers shop at large department stores instead of locally owned independent stores.

Freeman’s Men Shop first opened in the late 1990s’, and by 2002 there were two locations. At the time the owner – who previously had nine years of experience in the industry before opening his own stores – was hopeful that the business would blossom in the new location.

And even though the same owner opened yet another location in 2008, by the following year one shop was already closed with the owner citing the recession as the main reason for closing. At that time he also mentioned that his two other stores were also struggling financially.

At this point all of the Freeman’s Men Shop locations are closed, and assets from the business will be liquidated to pay off creditors. In total there are about 75 creditors listed on the business’ Chapter 7 bankruptcy filing.

In terms of debts and assets, the retailer claims to have less than $50,000 in assets, but somewhere between $100,000 and $500,000 in liabilities.

Overall, one real estate broker said Freeman’s Men Shop is following the path of many other independent and locally owned businesses who just can’t compete with the larger department store chains where most consumers are now choosing to shop.

This coupled with the fact that many consumers have had to cut back on spending due to job loss and debt from the recession has left many small business owners in tough financial situations and unable to continue to operate.

Source: Richmond Times-Dispatch, “Freeman’s files for Chapter 7 bankruptcy,” John Reid Blackwell, 26 April 2011

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