According to an article in Reuters, many retailers are on the brink of Chapter 11 bankruptcy and this year’s back-to-school and Christmas season may send them over the edge.
The article said:
“I expect that the numbers of bankruptcies are going to increase throughout the year as retailers now have to start spending money to increase inventory for Back-to-School and the Christmas season and they don’t have the necessary funds,” said Matthew Bordwin, managing director at KPMG Corporate Finance, who works with troubled retailers.
Many experts predict that 2009’s retail sales won’t be any better (and may be worse) than 2008. And many cautious vendors may demand cash-on-delivery for their goods, which could also push some retailers into bankruptcy. Right now a lot of retailers are attempting to restructure their debt outside of bankruptcy; but with the sales seasons quickly approaching and loans becoming due many of them have failed to reach any deals. As we move in the mid-year, many of these companies may have no choice but to file Chapter 11 bankruptcy and restructure their debt in court.