In April, the Albuquerque Journal reported that five Payless ShoeSource stores will close in New Mexico, including one in Albuquerque. This decision was made in connection with the company’s Chapter 11 bankruptcy filing.
“Chapter 11” refers to the U.S. Bankruptcy Code and is a form of business reorganization bankruptcy that usually allows a business to stay open, using a court-approved debt repayment plan to ease the pressure of heavy financial liabilities.
Other Payless locations closing are in Roswell, Alamogordo and Las Vegas, leaving 20 stores in the state. Across the country, almost 400 stores will close. The Journal quoted Payless’ CEO as attributing the decision to “continued challenges of the retail environment, which will only intensify.”
The article also pointed to the challenges to brick-and-mortar retailers brought by Internet shopping and the growing popularity of discount chains.
Retail bankruptcy rate growing
Bloomberg.com published a detailed article in April about the high rate of retail bankruptcy, noting that the highest chance of bankruptcy within the retail segment belongs to department stores, clothing retailers and electronics stores, with food and home improvement retailers safest. Bloomberg points to a new S&P Global Market Intelligence for this analysis.
Bloomberg says that the financial stress on retail seems to reach most of its segments. In fact, in roughly the first quarter of 2017, almost as many retail chains have announced bankruptcy plans as did so in all of 2016. S&P sees no “quick recovery.”
New Mexican outlook
New Mexican retailers are likely also feeling the pinch. After all, in March, New Mexico at 6.7 percent had the highest monthly rate of unemployment of any state, reports the U.S. Bureau of Labor Statistics or BLS. The financial pressure on state households may be reflected in conservative retail shopping practices.
If you are the owner of a New Mexican business who is experiencing financial stress as a result of these conditions, it would be smart to talk to a bankruptcy attorney about potential legal remedies. Options include not only bankruptcy, but also other possibilities like loan renegotiation or payment arrangements directly with creditors. The pros and cons of various options will be analyzed by you and your lawyer in detail in light of your short- and long-term goals.
The lawyers at Giddens & Gatton Law,amp; P.C., in Albuquerque counsel businesses of all sizes and types about bankruptcy and other approaches to debt relief.