A nice explanation of chapter 11 bankruptcy

This site is prone to publish bankruptcy news, as any kind of corporate bankruptcy filing is likely to lead to store closings.

However, a chapter 11 bankruptcy is actually a financial tool to help save a company, in a more macroeconomic sense. Stores may close, jobs may be lost, but if a thousand-store business can emerge with 700 locations and a viable business, that’s far more preferable to the company simply closing its doors for good.

The back half of Rob Walker’s Marker piece on the Pier 1 bankruptcy explains this nicely, and is worth reading. (Side note: Rob Walker and Marker are both highly recommended parallel reading to After Shopping.) In short, chapter 11 means a company “seeks a court-supervised process giving it some form of relief — a way to start over.” For its part, Pier 1 filed for bankruptcy in January, ahead of the pandemic, a process that was undone when stores had to close this spring.

We will see more bankruptcies and liquidations in the coming months, but not all of them will be worst-case scenarios; like you, this author is hoping for triumphs and clever new ways of doing business as we move forward.

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