Retail Therapy: Reorganizing Under Chapter 11
Since 2005, retailers have, for the most part, been unable to reorganize under Chapter 11. But there are measures that retailers can avail themselves of to help lessen the impact of the restrictive law.
February 26, 2015 at 07:12 AM
6 minute read
Much has been made about the ability (or inability) of retailers to effectively reorganize under Chapter 11 since the enactment of the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). Radio Shack's decision to reenter bankruptcy and the recent bankruptcy filings of Wet Seal, Delia's Inc., Deb Shops and Mexx have renewed discussions on this topic.
This seems like a good time to take a close look at 11 U.S.C. §365(d)(4), the most discussed BAPCPA amendment that impedes retailers' ability to reorganize, and to consider what steps retailers can take.
Since 2005, retailers have, for the most part, been unable to reorganize under Chapter 11. Loehmanns, Coldwater Creek, Circuit City Stores, Mervyns, Linens 'n Things, Borders Group and Filene's Basement are some of the largest retailers that have bumped up against this problem. For many, BAPCPA's amendment to this rule has been partly to blame. The revision was in response to growing case law that was viewed as disproportionately pro-debtor in certain key provisions—to the detriment of creditors' rights.
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