These are the 10 big companies that went bankrupt due to COVID
Last year was hard for companies, but for some companies, it was even harder. Low or non-existent consumer demand, reduced spending and stay-at-home orders crushed many businesses. Even after the economy slowly started to reopen, social distancing norms kept most consumers away from the markets. This resulted in many companies going bankrupt, including some big names. Here are 10 big companies that went bankrupt due to the COVID-19 pandemic last year.
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Ten companies that went bankrupt due to COVID-19
Last year, companies from almost all industries, including clothing retailers, travel companies, oil producers and more, filed for Chapter 11 bankruptcy. For our list of 10 big companies that went bankrupt due to the COVID-19 pandemic, we have only considered popular household names. A point to note is that filing for bankruptcy doesn’t inherently mean that the company will shut down. Rather, it is more of a financial restructuring. Here are 10 big companies that went bankrupt due to the COVID-19 pandemic last year (the list is in no particular order):
NPC International Inc.
This company may not be a household name, but it does have a household connection. NPC International is the largest franchisee of Pizza Hut restaurants. It opened the first Pizza Hut in 1962. NPC operates over 1,200 Pizza Hut and more than 385 Wendy’s stores across the U.S. It is the second-biggest franchise operator in the U.S. NPC filed for Chapter 11 bankruptcy in July.
Hertz
Hertz struggled after the drop in travel due to the pandemic last year. The company's used car sales also witnessed a significant drop. This forced the car rental company to file for Chapter 11 bankruptcy on May 22. Hertz had about $20 billion in debt last year. The company is working on selling most of its fleet to pay its creditors.
CMX Cinemas
CMX Cinemas filed for Chapter 11 bankruptcy on April 25, 2020. This chain of movie theaters with dine-in options is owned by Cinemex Holdings. The company won the court’s approval to sell the chain to an affiliate and pay up to 15% of unsecured claims. CMX Cinemas entered the U.S. market in April 2017 and soon was in the top-10 circuit in the North American market.
Rubie’s Costume Company
This company that makes costumes, wigs and other festive gear filed for bankruptcy on April 30, 2020. Rubie’s claims to be the biggest designer and maker of Halloween costumes in the world. This company got new ownership after its Chapter 11 bankruptcy and became Rubies II LLC. Prior to this, it was a family-owned and operated business that has been in existence for about seven decades.
Brooks Brothers
Founded in 1818, this classic suit brand filed for Chapter 11 bankruptcy on July 8. In August, a joint venture of Simon Property Group and Authentic Brands Group won court approval to acquire Brooks Brothers for $325 million. The new owners of this centuries-old brand promised to keep at least 125 Brooks Brothers stores running. Even before the pandemic, Brooks Brothers was considering a potential sale.
J. Crew
This preppy retailer filed for bankruptcy on May 4. J. Crew has already been struggling over the last few years due to the decline in mall traffic and the rise of online retailers. The pandemic made it even tougher for the retailer to meet its debt commitments. After the bankruptcy filing, all J. Crew lenders agreed to convert about $1.7 billion of the company’s debt into equity.
J.C. Penney
Founded in 1902, this retailer filed for bankruptcy in May 2020. The pandemic was not the only reason the retailer filed for bankruptcy. J.C. Penney was already struggling due to competition from Amazon and Walmart. Following bankruptcy, the company reached a deal to sell most of its retail and operating assets to Brookfield Asset Management and Simon Property Group.
Gold’s Gym
This company filed for Chapter 11 bankruptcy on May 4, 2020. Gold’s Gym owns and operates over 700 gyms in the U.S. and internationally. Gold’s Gym International was auctioned off in a court-approved auction process to Berlin-based RSG Group for $100 million. RSG Group owns the ultra-popular McFIT brand in Europe.
Chesapeake Energy
The massive reduction in energy demand following the pandemic last year forced this Oklahoma City-based company to file for Chapter 11 bankruptcy in June 2020. The company had more than $9 billion in debt and $1 billion in maturities and interest. Chesapeake emerged from bankruptcy earlier this year after removing $7.7 billion in debt from its balance sheet. The company will now focus more on natural gas than shale.
Virgin Atlantic
Virgin Atlantic filed for Chapter 15 protection on August 4 in New York. The company is 49% owned by Delta. Prior to filing bankruptcy, Richard Branson's company tried to negotiate a bailout deal with the British government and a private rescue package, but things didn’t work out.
