Special Report

American Brands That Went Bankrupt During COVID

1. Neiman Marcus
> Industry: Luxury goods

Luxury department store chain Neiman Marcus filed for Chapter 11 bankruptcy protection on May 7 in an attempt to restructure its debt and survive the harsh economic conditions created by the coronavirus pandemic. The chain’s problems had been compounded by the recent precipitous drop in sales of luxury goods, which were likely some of the first purchases to be postponed during the pandemic.

Neiman Marcus emerged from bankruptcy in September 2020 under new ownership and a plan that would eliminate $4 billion of debt. In March 2021, the retailer refinanced an additional $1.1 billion of debt, though its future is still uncertain and will largely depend on the continued improvement of the retail sector overall.

2. JCPenney
> Industry: Retail

JCPenney’s multi-billion dollar debt load, combined with the chain closing most of its stores nationwide because of COVID-19, has cast the company’s future into doubt. The company officially filed for bankruptcy in May and announced the closure of hundreds of its stores.

JCPenney emerged from bankruptcy in December. The brand will now be jointly owned and operated by Simon Property Group and Brookfield Asset Management, who had previously been the retailer’s main lenders and landlords.

3. J. Crew
> Industry: Clothing

Weeks after closing its doors on March 16, J. Crew filed for Chapter 11 bankruptcy. The company also said it reached an agreement with its lenders to convert more than $1.6 billion of the company’s debt into equity. J. Crew also secured a $400 million loan. Even before the pandemic, the company had struggled with a significant debt load following a private equity buyout.

J. Crew exited bankruptcy in September 2020, with courts approving a plan for lender Anchorage Capital Group to take control of the business as majority owner.

4. Frontier Communications
> Industry: Communication services

Telecommunications company Frontier Communications entered the pandemic in a dire situation, with a debt burden of more than $17 billion. The telecom provider also carried a credit rating of SD (selective default), meaning credit rating agency Standard & Poor’s believed Frontier decided to default on at least one financial obligation but could meet other obligations.

In an attempt to reduce its debt, Frontier declared bankruptcy in April and sold its operations and assets in four northwest U.S. states. Frontier’s stock has been in decline for years and was worth less than 8 cents per share as of May 8.

Source: Chalffy / Getty Images

5. Hertz
> Industry: Car Rental

With nonessential travel all but canceled for months, car rental company Hertz struggled with a lack of income. The company filed bankruptcy in May 2020 to restructure an estimated $19 billion in debt. Hertz announced a plan to cut nearly 10,000 jobs in April, but the company still failed to make some lease payments that month.

Nearly a year later, the company is still trying to exit Chapter 11 proceedings. In May 2021, reports emerged that several firms were bidding to take over the car rental giant. Any bid would need to be approved by a judge.

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