As the world of retail goes from brick-and-mortar stores to the internet, more and more retail businesses face financial difficulty. One option these businesses have is to restructure debts through a Chapter 11 bankruptcy.
Clothing chain Forever 21 may use Chapter 11 to help its business. This would put the company in a line of many retail stores that have filed for Chapter 11 recently.
Reports say that Forever 21 has plans for bankruptcy
According to reports, Forever 21 has tried to restructure its debts through advisers. But some with knowledge of the company say that with limited options, the company has started to prepare for a Chapter 11 bankruptcy filing. The bankruptcy would help them to restructure debts while negotiating leases they have on stores that are not profitable.
Bankruptcy may help the company
While a bankruptcy seems to be a bad thing for a company, a Chapter 11 bankruptcy could help Forever 21 simplify its business and debts. The bankruptcy would help the company consolidate debts and make them easier to pay off. It can also help them close down stores that cost more money than they make. A bankruptcy can let the company reset and start fresh.
The company will get to propose how they will pay off their debts. This keeps them in control of the bankruptcy process. They will get to decide the restructuring of their debts and how they will pay them off. If they plan well, the bankruptcy can leave them in a good place to start growing again.
As the economy changes, many companies may need to look at different options for restructuring their debts. Chapter 11 bankruptcy can help companies with unmanageable debt get a fresh start.