The COVID-19 pandemic has pushed several large and small businesses into filing for bankruptcy and Stein Mart, Inc. has joined the growing list. On August 12, 2020, Stein Mart, Inc. announced that it voluntarily filed for Chapter 11 bankruptcy [Source: Global Newswire]. Hunt Hawkins, who is the company’s Chief Executive Officer and Chief Financial Officer said, “The combined effects of a challenging retail environment coupled with the impact of the Coronavirus (COVID-19) pandemic have caused significant financial distress on our business.”
Hawkins added, “The Company has determined that the best strategy to maximize value will be a liquidation of its assets pursuant to an organized going out of business sale. The Company lacks sufficient liquidity to continue operating in the ordinary course of business.” In his statement, Hawkins also thanked all employees for their “dedication and support.” As a part of the bankruptcy deal, the company plans on closing “a significant portion, if not all, of its brick-and mortar stores.” The company has also announced that is has launched a store closing and liquidation process.
While the company says that it will continue to “operate its business in the ordinary course in the near term,” it is considering selling its eCommerce business as well.
What happens when a company files for Chapter 11 bankruptcy?
Companies that are struggling with debt and are looking to restructure in order to keep their name alive often file for Chapter 11 bankruptcy. Given the circumstances the COVID-19 pandemic has left many businesses with, companies are turning to Bankruptcy Courts for protection from those they owe money to. When a company files for Chapter 11 bankruptcy, they are expected to use the time from when they file for bankruptcy up until they complete their debt repayment plan to reorganize their finances.
During the time a company is under bankruptcy protection, it may continue with operations such as keeping some store locations open. If a business is unable to successfully reorganize, the Internal Revenue Services (IRS) says the case may then be converted into a liquidating Chapter 7.
It is worth noting that there are certain things a company should and should not do before and during the bankruptcy proceedings such as accruing more debt. If you are considering filing for a Chapter 11 or 7 bankruptcy in Tulsa, OK, you are going to want to consult with a Tulsa, OK bankruptcy lawyer who can help you get your financial affairs in order before you file the initial paperwork. The Henson Law Firm, PLLC is a bankruptcy law firm located in Tulsa, OK that can help you understand the bankruptcy process as well as which type of bankruptcy would be best for you.