Several well-known US retailers and companies have had a difficult year. Following the Covid-19 outbreak, businesses had to deal with a plethora of issues like exorbitant expenses, a lack of supplies, and intensifying rivalry.
As a result, in 2023 a number of well-known names declared bankruptcy.
Naturally, a bankruptcy does not always indicate that a company is failing. In order to reduce expenses, wind down some activities, and get rid of debt, many US corporations file for bankruptcy. Chapter 11 bankruptcy is a popular path, which enables the business to reorganize in order to address its financial issues.
WeWork:
In 2023, WeWork had an exciting voyage. Once the most valuable start-up in the country, the business appeared ready to completely change the way people worked in the United States. Some draw parallels between its explosive ascent and dramatic, public collapse with the FTX and Fyre Festival mishaps.
In November, the struggling coworking space firm declared bankruptcy under Chapter 11. It came as little surprise. WeWork had stated a month earlier that it was having trouble repaying its debt as the epidemic disrupted its main business and more people chose to work from home.
But the demise of the former unicorn in the tech industry started long before COVID-19. The company’s disastrous 2019 IPO effort exposed greater-than-anticipated losses and possible conflicts of interest with founders and former CEO Adam Neumann. Neumann was fired in 2019 as a result of his unconventional leadership style, which received extensive media attention and was the subject of a Hulu documentary.
WeWork stated that while it renegotiates its debt commitments and leases, it will stay open and functional.
Rite Aid:
Following a protracted series of issues for pharmacies, Rite Aid declared Chapter 11 bankruptcy in October.
Rite Aid, like CVS and Walgreens, was forced to pay out large sums of money to resolve lawsuits brought about by claims that it had given clients illegal prescriptions for opioids. However, in contrast to its competitors, Rite Aid was losing the war against the growing debt and was unable to make a profit.
Rite Aid was also having trouble competing with more consumer-focused national drugstore companies like Amazon, Walmart, Target, and Costco.
The company stated in an October SEC filing that it anticipated large losses, on top of the $74.5 million it lost between March 2022 and March 2023 and an additional $307 million between March and May of this year.
In a statement, the business announced that it had obtained debt reduction plans and $3.5 billion in funding from lenders to help it survive bankruptcy. It also announced the appointment of a new CEO and announced that it will quicken the pace of its shop closures and divest several of its operations, including prescription benefit supplier Elixir Solutions.
Rite Aid expressly mentioned rising theft as a reason for closing a few of its locations.
Bed Bath & Beyond:
In April of this year, the everything-store filed for bankruptcy, capping a lengthy journey. In one of the biggest retail bankruptcies in recent memory, it shut down its last 360 locations in addition to 120 buybuy BABYs.
Still visible, though, is the well-known blue logo. After saving the company from bankruptcy, Overstock.com rebranded it as BedBathandBeyond.com. With this transaction, prominent branded products that Bed Bath & Beyond customers preferred were combined with Overstock’s online business model and retail categories.
The renowned “Big Blue” coupon, which offers 20% off a single item from Bed Bath & Beyond, has been revived but is only valid online.
The business had been cutting back on expenses for a while. It had stated earlier in 2023 that it will close about 400 outlets while maintaining successful businesses in important markets. In a further attempt to cut costs, some laid-off employees at closing locations were not given severance pay.
Tuesday Morning:
Another home goods store to fail in 2023 was Tuesday Morning, which filed for Chapter 11 bankruptcy in February citing “excessive debt.” This is the second bankruptcy in the last three years.
In May, the company announced that it would go out of business and close all 200 stores.
The first bankruptcy occurred in May 2020 at the height of the pandemic, due to prolonged store closures that posed “insurmountable financial hurdles. ” Three years ago he already had 700 locations. The party seemed to be over when the party supply store filed for bankruptcy in January 2023, burdened by competition and years of financial losses.
The company has reached an agreement with its creditors to reduce its debt burden by $1.7 billion, according to a regulatory filing.
Party City:
The biggest party provider in America declared bankruptcy in 2023 as a result of competition from big-box retailers, increased expenses during the pandemic, and a scarcity of helium.
But in September, the retailer’s reorganization plans were approved by a US judge, and it was able to emerge from bankruptcy.
Party City’s debt of almost $1 billion will be erased by the plan, and the firm reports that most of its almost 800 US locations would remain operational, although some will close as a result of the bankruptcy arrangement.
