Home goods and decor retailer Pier 1 Imports Inc. filed for Chapter 11 bankruptcy on February 17 and is pursuing the sale of the company. According to its last yearly financial report, the company had about 18,000 employees as of March last year, 4,000 of those full time.
Pier 1 was founded in 1962 and was a leading retailer throughout the 1990s. Over the last year, Pier 1 has seen its sales and profits drop, and its share price fall more than 80%. It will continue to operate through bankruptcy proceedings. Its filing in U.S. Bankruptcy Court in Richmond, Virginia, lists more than $500 million of assets and liabilities.
Why Pier 1 and Other Retailers Are Filing for Bankruptcy
Pier 1 and other brick-and-mortar retailers such as Kmart and Sears are facing heavy competition from online retailers like Amazon.com and Walmart. According to economic news site Marketplace.com, many of these well-known chains are suffering from the glut of space in the U.S. dedicated to retail stores that grew out of the expansion of shopping malls and stores over the past few decades.
The increased competition combined with the economic downturn after 2008 spurred shoppers to start looking for deals online. Pier 1 and other companies are suffering the effects of this shift in consumer behavior. Sears and Kmart, both acquired out of bankruptcy by parent company Transformco last year, have closed a total of more than 3,500 stores and cut about 250,000 jobs in the previous 20 years.
How Many Pier 1 Stores Are Closing in North Carolina?
The following eight locations in North Carolina are slated to close:
- 47 – 3734 East Franklin Blvd., Gastonia
- 69 – 1472 Jeffreys Road, Rocky Mount
- 1069 – 88 Highland Square Drive, Hendersonville
- 1222 – 1210-C Bridford Parkway, Greensboro
- 1252 – 6807 Fayetteville Road Ste 102, Durham
- 1275 – 8391 Brier Creek Parkway, Raleigh
- 1536 – 436 Daniels Street, Raleigh
- 1657 – 2108 Village Market Place, Morrisville
Company-wide, a total of 450 stores, including all those in Canada, have closed or have started going-out-of-business sales. Two distribution centers will be shut down, and about 40% of corporate staff will be cut.
Is the Pier 1 Franchise Going to Be Sold?
Pier 1 issued a statement saying it is in talks with several potential buyers. CEO Robert Riesbeck, a restructuring expert who assumed leadership in November, said, “Today’s actions are intended to provide Pier 1 with additional time and financial flexibility as we now work to unlock additional value for our stakeholders through a sale.
We are moving ahead in this process with the support of our lenders and are pleased with the initial interest as we engage in discussions with potential buyers.”
The company estimates that the deadline to submit a qualified bid will be on or around March 23.
Why Chapter 11 Bankruptcy?
The primary reason for a business to file Chapter 11 bankruptcy is to reorganize its debt and assets. While not a completely painless step (fees and court costs for even a small case can range from $10,000 to $25,000), Chapter 11 gives a business time to get its financial affairs in order, and the opportunity for a fresh start.
There are important considerations to make before filing Chapter 11, including the exit strategy, the costs, the company’s access to capital, the increased court oversight and scrutiny, and whether closing the business and creating a new one would be a better option.
If you own a small business, Chapter 11 bankruptcy presents a unique challenge. There are additional filing requirements, including a 300-day deadline for filing a reorganization plan, and the U.S. trustee will provide additional oversight.
There are some aspects that make the process easier and more affordable for small businesses, however. Small businesses have a 180-day exclusivity period (typically 120 days) before creditors can file a competing plan, and no disclosure statement is required.
Our bankruptcy attorneys can review all of these details with you and find the best path forward for your business. We do not charge for an initial evaluation of your case.
Chapter 11 Bankruptcy Process
- When a company or an individual files Chapter 11 bankruptcy, an automatic stay is granted, which protects the debtor and their property from creditor actions.
- The debtor will then file a detailed list of creditors, a schedule of assets and liabilities, current income and expenditures, and a statement of the debtor’s financial affairs.
- The court clerk will send a notice of the filing of the petition to all creditors on the list, who are given an opportunity to participate in the case to varying degrees.
- The debtor has 90 days from the date of filing to develop a reorganization plan.
- Creditors vote to either accept or reject the reorganization plan.
- The Court holds a confirmation hearing where the precise scope and nature of the discharge of debt is determined.
- The debtor makes plan payments and is bound by provisions of the reorganization plan.
- A final decree is entered, closing the bankruptcy case.
Call the Bankruptcy Attorneys at Sasser Law Firm Today
If you are considering bankruptcy for yourself or your company, contact the board-certified bankruptcy lawyers at Sasser Law Firm. We can help guide you through this complicated and stressful process and make it as worry-free as possible.
We have extensive experience handling Chapter 7, 11, and 13 bankruptcies. We’ve got over 7,000 cases for individuals and businesses under our belts. We take on the toughest cases and will fight through appeal if necessary. Our clients’ success is what matters most to us.
When you call Sasser Law Firm, you will speak directly with an attorney. You won’t be passed off to a paralegal. There is no fine print. We are straightforward about all our fees. Call Sasser Law Firm today for a free consultation.