Why businesses that declare bankruptcy don’t always die

In the ever growing wave of multi-channel-commerce, traditional brick and mortar retailers need to know their right to exist. And if a reorganization is required to re-position the business, they need to be proactive in shedding under-performing stores, unfavorable leases, and poor product lines and assortments.

If they wait until they are on the doorstep of Chapter 11 it may be too late, Mackinac Partners Senior Managing Director Melissa Kibler discussed recently with Vox Media:

“Under the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), retailers now get a maximum of 210 days (a 120-day deadline, plus a single 90-day extension) to accept or reject their store lease terms. No further extensions are granted without the landlord’s consent.”

“This matters because it put a massive time crunch on retailers, which now have significantly less time to figure out which stores they ought to keep open and which they should close. It takes 120 days to organize and run a going-out-of-business sale,” says Kibler, “effectively giving the retailer a mere 90 days to figure out its store closure strategy.”