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Bankruptcy May Be Your Option

Another retailer seeks Chapter 11 bankruptcy protection

While the Internet has revolutionized how many companies in Oklahoma and other areas of the country conduct their business, it has also created complications for retailers that are primarily brick-and-mortar based. Recently, several retailers have struggled financially, many opting to file for Chapter 11 bankruptcy protection. Another store has recently taken such action.

The store, Papaya, opened in 1999. It focuses on teen apparel. As with many niche retailers, it achieved a great deal of success relatively quickly, prompting it to expand rapidly. In fact, the company opened over half of its 80 stores in the last six years. However, these new stores also came with new debt.

In addition to construction and other costs, many retailers have seen decreased growth in recent years. Stores that are primarily based in malls, for example, are seeing less traffic. Although it seeks bankruptcy to restructure, some reports claim that Papaya remains successful with approximately $134 million in sale, potentially demonstrating the harm that heavy debt can cause for a business. Papaya representatives are asking to be released from approximately 30 leases for stores they have either already closed or are soon planning to close.

Many businesses in Oklahoma and across the country are struggling as consumers transition to largely online purchasing. In the years leading up to this transition, many businesses opened additional stores based on the trends at the time. However, these stores are now left struggling. As a result, many turn to Chapter 11 bankruptcy protection to help them manage their debt and institute a new plan for the future. An attorney with experience with such proceedings can guide a business' decision-makers throughout the process.

Source: retaildive.com, "Papaya becomes latest teen apparel retailer to file for bankruptcy", Ben Unglesbee, June 19, 2017

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