Industry after industry saw its activity almost shut down in March as the pandemic erupted in the United States. Retailers have had to deal with stores closed for weeks and shoppers too shocked to spend anything other than essentials; energy companies have faced sharp declines in demand and, by extension, prices; Healthcare companies have faced the industry’s transition to tackling COVID and moving away from more standard care – and the list goes on.
The result was 610 bankruptcies as of December 13, according to S&P Global Market knowledge. This statistic is the highest since 2012, according to the rating agency, and compares with 552 bankruptcies during the same period last year. (S&P tracks companies, private or publicly traded, whose debt is traded in the markets.)
Few sectors have been spared the pandemic-fueled recession, judging by the 2020 bankruptcy list. This list includes retailers such as JC PenneyCar rental giant Neiman Marcus and J.Crew Hertz, shopping center operator CBL & Associates Properties, internet service provider Border communications, the oil service provider Superior Energy Services and the hospital operator Quorum Health.
The wave of bankruptcies has been particularly brutal for department stores, clothing companies and other retailers selling non-essentials. Consumers turned to big box stores where they could do all their shopping under one roof, and they focused on things like food and home improvement. According to S&P, about 20% of bankruptcy filings were filed by non-essential retailers – far more than in any other category.
Even as the vaccine deployment begins in the United Statess, giving people a much needed morale boost, 2021 will be a tough time for American businesses as a whole.
Retailing, in particular, is likely to suffer further. As November’s weak consumer spending figures show, Americans are quick to hold back in the absence of support for the millions of people out of work, or in the face of new restrictions. And the mass vaccinations, which can alleviate the situation, are still months away.
Rating agencies are closely monitoring companies they deem struggling to see how they fare in 2021. On the retail side, that means companies such as Jo-Ann Stores, Rite-Aid, Party City and Belk; in the restaurant business they include Potbelly and Noodles & Co.
The agency expects overall profits to increase in 2021, as retailers won’t have to invest as much in things like plexiglass dividers, curbside pickup areas and other similar items. But the companies that were struggling before the pandemic, and which sort of struggled until 2020, are far from being out of the woods.
“You’re going to see weaker players fall,” Moody’s vice president Mickey Chadha said. Fortune.
Here are some of the most notable bankruptcy filings in 2020 across different industries, with a liability size at the time of a company’s Chapter 11 petition:
- Frontier Communications ($ 17.1 billion): The telephone and Internet service provider has suffocated under huge debt and investments in fiber-optic infrastructure that came too late. Still, Frontier is set to release Chapter 11 soon.
- Neiman Marcus ($ 5.3 billion): The luxury department store the weak balance sheet turned out to be untenable at a time when in-store sales are declining and premium brands are becoming more aggressive in their sales through their own stores and sites. It emerged from the protection of bankruptcy law, but faces more of the same difficult landscape.
- Offshore diamond drilling ($ 6.3 billion): Record drop in crude oil prices as global economy virtually shut down in spring destroyed demand for offshore oil exploration.
- Custom brands ($ 1.5 billion): With millions of men working from home during the pandemic, the parent company of costume supplier Men’s Wearhouse, which still struggled to digest its acquisition of Jos. A. Bank in 2014 experienced an untenable drop in sales.
- The McClatchy Co. ($ 1.5 billion): The news company had struggled with declining print subscriptions for years, leading to bankruptcy in February.
- CBL & Associates Properties (over $ 1 billion): The mall operator’s second level properties have been struggling with a decline in buyer visits for some time, and COVID-19 has pushed the company to its limits.
- 24 hours of fitness around the world (over $ 1 billion): Gyms were among the first businesses closed during lockdowns and the last to be allowed to reopen, resulting in huge strains on the finances of channels like 24 Hour Fitness.
- Hertz (over a billion dollars): The virtual disruption of travel, especially business travel, has proven too burdensome for a company struggling to cope with threats to its business model, forcing it to restructure its debt.
- Quorum Health (over $ 1 billion): The operator of 24 hospitals struggled with heavy debt made more difficult to bear as the COVID-19 pandemic has reduced its ability to perform elective procedures that are most cost-effective for hospitals. (It came out of Chapter 11 in June.)
- JC Penney, J.Crew, Ascena Retail (Ann Taylor), Stage Stores and Stein Mart: These retailers were unstable long before the arrival of COVID-19 and were decimating spending on clothing, exposing their weaknesses.
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