Retailers Continue to Feel the Sting

Although corporate bankruptcies fell for the year, it appears many retailers are still having significant problems staying away from the bankruptcy bug.

While bankruptcy filings exceeded 1.5 million in 2010, a 14% increase and the highest number since 2005 reform, business bankruptcies actually declined by 1%, according the Supreme Court's 2010 Year-End Report on the Federal Judiciary. Still, retailers have struggled amid an economic recovery that can be characterized as underwhelming at best to date.

The next victim, if widespread speculation proves corrected, could be book retailer Borders. Experts and publications such as the Wall Street Journal and The Street have grown increasingly loud in their predictions that the company will need to enter Chapter 11 bankruptcy. In fact, a poll conducted by the latter found that more than 2/3 of respondents believed a Borders Chapter 11 filing was not only likely, but imminent. At least one publisher reportedly has stopped all shipment of books to the retailer following its quiet admission last month of potential delays in vendor payments on the horizon.

Meanwhile, clothing retailer Loehmann's appears to be heading in a different direction. The company, which filed for bankruptcy in November, is on the brink of emerging from its Chapter 11 much healthier as a judge has given preliminary approval on its restructuring plans. Creditors must vote on the plan by February 2, and a follow-up court hearing is slated for February 7 for final confirmation, as long as there are no snags along the way. Loehmann's has noted it plans to keep most of its remaining near-50 stores operating in a business-as-usual capacity and plans to be financially solvent during the present year.

(Editor's Note: See full version of this story in the upcoming edition of NACM eNews, available Thursday afternoon).

Brian Shappell, NACM staff writer

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