As retailers including J. Crew and Neiman Marcus file for bankruptcy, experts worry about skittish creditors and an overloaded bankruptcy court system
Filing for Chapter 11 bankruptcy protection gives distressed companies a chance to reorganize and get a fresh start.
But, the very nature of the pandemic and varied responses from states could make it nearly impossible for businesses to predict their future. This unpredictability complicates retailers' plans to emerge from bankruptcy. According to Song Ma, an assistant professor of finance at Yale School of Management, this uncertainty could make creditors more hesitant to work with companies through the bankruptcy proceedings.
to give themselves more time to pay landlords, vendors, and other lenders while they are unable to hold liquidation sales due to restrictions. Experts are also starting to worry about a potential overload of the bankruptcy court system as both corporations and individuals could file at a higher rate over the coming months.
Ben Iverson, a professor at Brigham Young University, and Mark Roe, a professor at Harvard Law School, argued in anthat the bankruptcy court system should immediately work to expand its capacity to hear cases in order to avoid these issues.
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