Ninety-eight bankruptcies were filed by companies with at least $50 million in liabilities year-to-date, the highest since 2009, reported Bloomberg (May 28).
In May alone, some 27 companies reporting at least $50 million in liabilities sought court protection from creditors.
Recently, the U.S. arm of Le Pain Quotidien filed for bankruptcy in Delaware with plans to sell itself for $3 million, reported Bloomberg (May 27). The Chapter 11 petition allows Le Pain Quotidien to rework its debts and carry out a sale to Aurify Brands LLC, which requires court approval.
Without the sale, the company would’ve had to liquidate its 98 U.S. stores, according to chief restructuring officer Steven Fleming. The company’s sales were slipping due to competition and lack of investment in its stores even before the pandemic caused closures.
The chain closed all of its U.S. locations in late March and dismissed almost all of its employees. The U.S. arm reported a nearly $17 million loss on $153 million in sales in 2019.
In April, FoodFirst Global Restaurants, the parent company of the Brio Italian Mediterranean and Bravo Fresh Italian restaurant chains, filed for Chapter 11 bankruptcy, reported Business Insider (May 27). The company said that 71 of its 92 restaurants temporarily closed amid the coronavirus outbreak.
Additionally, Garden Fresh Restaurants, owner of the buffet chains Souplantation and Sweet Tomatoes, filed for Chapter 7 bankruptcy on May 14, choosing to close its doors for good.
Meanwhile, dozens of TGI Fridays will close permanently as the chain struggles to recover from a drastic sales decline amid COVID-19, reported The Boston Globe (May 26). At the start of the crisis, sales at TGI Fridays dropped by about 80% almost immediately, according to CEO Ray Blanchette.
Following a shift to pickup and delivery, revenue recovered somewhat, but is still down about 50%. As many as 20% of the company’s 386 U.S. locations will likely close permanently, said Blanchette.
Few people believe bankruptcies have hit a peak. “I think we’re going to continue to see filings of at least the level we’re seeing for a while,” said Melanie Cyganowski, a former bankruptcy judge now with the Otterbourg law firm.
However, Americans on unemployment benefits posted its first drop of the pandemic, reported Bloomberg (May 28). Continuing claims, which tally Americans’ ongoing benefit claims in state programs, fell to 21.1 million for the week ended May 16, Labor Department figures showed.
This suggests the job market is starting to rebound as businesses reopen. Analysts previously expected an increase in claims. Still, despite optimism in financial markets, economists expect recovery to take years.