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Home 9 Commercial Bankruptcy 9 Clothing retailer to undergo major retail cutbacks as part of bankruptcy reorganization

Clothing retailer to undergo major retail cutbacks as part of bankruptcy reorganization

by | May 23, 2016 | Commercial Bankruptcy

Staying competitive and thriving financially over the long-term is no easy matter for any business. Constant adaptation, innovation and foresight are necessary to ensure a business’ success over the long haul. Every business owner has experienced seasonal and temporary challenges, but when a business begins to encounter serious problems, when it is threatened with insolvency, its leadership has to address the situation appropriately.

Earlier this month, clothing retailer Aeropostale filed for Chapter 11 bankruptcy and announced that it will be closing a significant number of stores–150 in all–both in the United States and Canada, including two in Wisconsin. Sources say that, at the beginning of May, Aeropostale had 739 stores in the United States and Puerto Rico, and another 41 in Canada, so the company is doing some significant cutbacks in an effort to adapt to its financial challenges. 

The retail store closings are part of the company’s effort to increase efficiency in operations and get its head above water. This kind of strategy is fairly common with Chapter 11 bankruptcy, which allows a business to reorganize itself and consolidate its resources. Companies can use this approach to focus efforts on profitable products, services and markets, though as we previously pointed out, consolidating resources isn’t always the sole solution to the problems that get a company in financial trouble in the first place.

Companies going through the bankruptcy process, of course, need to have a solid plan for reorganizing and revitalizing themselves. This involves not only making the right decisions with regard to seeking debt relief, but also possibly changing how the company does business and the direction it has been taking. All of this is part of the bankruptcy process, and working with an experienced attorney can help ensure a company has solid guidance and advocacy in addressing its financial challenges.