With so many businesses being shuttered during the COVID-19 pandemic, it’s no surprise that even well-established major corporations are pursuing bankruptcy. J. Crew was among the first of the major corporations to file for bankruptcy amidst the Coronavirus shutdown, marking an end of an era for a major American apparel retailer with international acclaim. Its retail services were deemed non-essential and, with consumer budgets tighter than ever, it was hit hard, along with much of the retail industry.
Other giants who have filed for bankruptcy in recent months include Pier One Imports, Art Van Furniture, and even Whiting Petroleum Company, who experienced huge losses from the crash in oil prices. Unfortunately, many more are projected to suffer the same fate.
While it’s not just retail that is (and will be) impacted by the Coronavirus, there are some factors to consider when looking at some of the industries most heavily impacted by a global pandemic. Luxury retail and travel-related services will likely continue to experience the biggest hardships.
The early statistics on the economic fallout of COVID-19 are in and, in addition to retail, have identified the following industries as being the hardest hit so far.
This one may seem obvious, since most borders are currently closed and only essential travel is allowed. However, even in spite of a $58 billion dollar bailout from the federal government, many airlines are projected to file for bankruptcy in the coming months. This also has projected downstream effects for the aerospace industry, as well.
Casinos and Gaming:
With most casinos and gaming facilities shut down completely, this entire industry is at a stand still, until it’s time to safely re-open those sectors of the economy. Even then, it will be a slow start, while consumer confidence gradually re-builds.
The automotive industry, including retail parts and manufacturing, is also seeing the impact of COVID-19. Consumers are holding off on non-essential repairs, which means automotive shops and dealerships aren’t as busy. Unfortunately, it also means that the automotive parts industry has seen a huge decline in their demand. Factory shutdowns due to the pandemic have also played a factor in parts and equipment availability, even for businesses which are deemed essential.
Oil and Gas Drilling:
With the demand for travel of any kind being lower than it has been in decades, oil prices dropped precipitously in recent months. It’s little surprise that these corporations are also experiencing financial hardship during the Coronavirus.
What do these large bankruptcies mean for small business owners?
There is good news for small businesses considering bankruptcy during this time. Some of the COVID-19-related changes concern federal bankruptcy law. This is, in part, owing to the record number of large corporations having to file for bankruptcy protection at this time.
Many small businesses may even find bankruptcy as a way to stay afloat during this pandemic, owing to recent changes in Chapter 11 bankruptcy filing guidelines. The Small Business Reorganization Act (SBRA), for example, made small businesses with under $2.7 million in debt eligible for debt restructuring. The recent federal CARES Act for economic stimulus upped that threshold to $7.5 million to qualify for Chapter 11.
If you’re wondering whether your business could be eligible for debt restructuring during COVID-19, contact the Law Offices of Bill Payne, P.C., an experienced bankruptcy attorney with more than 30 years helping businesses learn what their options are. There’s no need to drown in debt during a pandemic, and we are here to help you through that process with a free consultation to discuss your unique situation.