Business Failures

[pbrower2a]

SEARS

Sears, once the largest retailer in the world, is now reportedly facing bankruptcy.
The company, which hasn’t turned a profit since 2010 and is $134 million in debt, recently approached several banks to prepare for bankruptcy filing, CNBC reported Wednesday.

Shares plunged almost 20 percent on the news, and are set to open at a record low.




Sears CEO Eddie Lampert has been pumping funds from his own hedge fund, ESL Investments, into the company for years in an attempt to keep it afloat. Lampert owns a controlling share in Sears, with 31 percent of its stock; his hedge fund owns another 19 percent.

In August, ESL made an offer to buy out Sears' well-known appliance brand Kenmore and the company's home improvement business. Cash from those sales would infuse the company with around half a billion dollars, which could stave off bankruptcy for a few more months. Sears sold off another legacy brand, Craftsman, in 2017.

Once a staple of Main Street and malls nationwide, the 125-year-old company has shut down over 100 stores in the last year, with 46 stores set to shutter next month alone. Sears and Kmart, part of Sears Holdings, operated around 1,000 stores in 2017.

Shares have fallen by more than 85 percent in the last year as e-commerce has taken over the brick-and-mortar retail space. Despite pairing up with Amazon in 2017 to sell appliances online, analysts say Sears has not kept pace with change nor made investments in the digital space to the extent that Walmart and Target have done.

https://www.nbcnews.com/business/busines...rt-n918446

[David Horn]

(10-10-2018, 10:16 PM)pbrower2a Wrote: SEARS

Sears, once the largest retailer in the world, is now reportedly facing bankruptcy...

Sears was an extremely arrogant retailer in its heyday, which lead to their first demise.  The vulture capitalist who bought the company on the cheap was even less enlightened.  Stanley Tools got the Craftsman brand and some other company got the Kenmore brand, so the best parts of the company survive.

[pbrower2a]

(10-11-2018, 09:49 AM)David Horn Wrote:

(10-10-2018, 10:16 PM)pbrower2a Wrote: SEARS

Sears, once the largest retailer in the world, is now reportedly facing bankruptcy...

Sears was an extremely arrogant retailer in its heyday, which lead to their first demise.  The vulture capitalist who bought the company on the cheap was even less enlightened.  Stanley Tools got the Craftsman brand and some other company got the Kenmore brand, so the best parts of the company survive.

I have a thread on the life-cycle of businesses. About five years ago. about anyone could see that Sears was then Craftsman, Kenmore, Land's End, and junk. Sears was living on a reputation, which is simply not enough.

This is a bad time for dry-goods retailing. Maybe people are no longer excited about buying stuff in the post-industrial era. Maybe they want experiences instead of stuff.

At one time Sears owned WLS (call letters allegedly meant "World's Largest Store") Radio when its wide-ranging zone of broadcasting got rural America into its sales market.

[pbrower2a]

USA Gymnastics, which channeled many excellent female gymnasts into Olympic competition but could not keep Larry Nassar's filthy paws off the gymnasts, has filed for Chapter 11 bankruptcy.

Quote:(AP) USA Gymnastics is turning to bankruptcy in an attempt to ensure its survival.

The embattled organization filed a Chapter 11 bankruptcy petition on Wednesday in an effort to reach settlements in the dozens of sex-abuse lawsuits it faces and to avoid its potential demise at the hands of the U.S. Olympic Committee.

USA Gymnastics filed the petition in Indianapolis, where it is based. It faces 100 lawsuits representing over 350 athletes in various courts across the country who blame the group for failing to supervise Larry Nassar, a team doctor accused of molesting them. Nassar, 55, worked at USA Gymnastics and Michigan State University for decades. He is serving effective life sentences for child porn possession and molesting young women and girls under the guise of medical treatment.
.....................

(Kathryn) Carson, who replaced Karen Golz as chairwoman last week, said she accepted the position because she believes in the direction of USA Gymnastics, which she said doesn't need money but rather time.

"We think we're changing the dynamic and we certainly believe that we will try to remain the NGB," Carson said. "To be clear, it is our lawyers' firm belief that the bankruptcy will automatically stay (decertification) ... and we will work with the USOC to regain credibility."

Nicholas Georgakopoulos, a bankruptcy expert and law professor at the Indiana University's Indianapolis campus, said USA Gymnastics is "hoping for a miracle" with its legal maneuvering.

"The USOC says you violated this relationship, here are the consequences and USA Gymnastics is saying it filed for bankruptcy, there are no consequences," Georgakopoulos said. "This is like a gambling addict who goes to the casino and gambles every day and one day the casino says you can't come anymore, you've lost too much, and addict says, I filed for bankruptcy, you can't stop me from coming to the casino."

If the USOC wants to go forward with decertification, it must now go to court.

https://www.msn.com/en-us/news/other/usa...smsnnews11

[pbrower2a]

NEW YORK (AP) — Payless ShoeSource is shuttering all of its 2,100 remaining stores in the U.S. and Puerto Rico, joining a list of iconic names like Toys R Us and Bon-Ton that have closed down in the last year.

The Topeka, Kansas-based chain said Friday it will hold liquidation sales starting Sunday and wind down its e-commerce operations. All of the stores will remain open until at least the end of March and the majority will remain open until May.

The debt-burdened chain filed for Chapter 11 bankruptcy protection in April 2017, closing hundreds of stores as part of its reorganization.

At the time, it had over 4,400 stores in more than 30 countries. It remerged from restructuring four months later with about 3,500 stores and eliminated more than $435 million in debt.

The company said in an email that the liquidation doesn’t affect its franchise operations or its Latin American stores, which remain open for business as usual. It lists 18,000 employees worldwide.

Shoppers are increasingly shifting their buying online or heading to discount stores like T.J. Maxx to grab deals on name-brand shoes. That shift has hurt traditional retailers, even low-price outlets like Payless. Heavy debt loads have also handcuffed retailers, leaving them less flexible to invest in their businesses.

But bankruptcies and store closures will continue through 2019 so there’s “no light at the end of the tunnel,” according to a report by Coresight Research.

Before this announcement, there have been 2,187 U.S. store closing announcements this year, with Gymboree and Ascena Retail, the parent of Lane Bryant and other brands, accounting for more than half the total, according to the research firm. This year’s total is up 23 percent from the 1,776 announcements a year ago. Year-to-date, retailers have announced 1,411 store openings, offsetting 65 percent of store closures, it said.

Payless was founded in 1956 by two cousins, Louis and Shaol Lee Pozez, to offer self-service stores selling affordable footwear.

https://www.huffpost.com/entry/payless-s...57c36c0fd5

[pbrower2a]

Here's one business model that could fail: the restaurant buffet. It's not for the finances (although those places operate on a razor-thin margin to price-sensitive people, which is a poor sort of business to be in when the economy takes a nosedive or tastes change.

https://www.vox.com/the-goods/2019/4/3/1...den-corral

The problem is that food must either be very cold or outright hot to not be vulnerable to bacteria that can make people terribly sick. The food can be made cheaply in batches and be self-service, so it does not need the wait staff that a sit-down restaurant has, People may be serving themselves some E. Coli with their fried rice, french fries, or lettuce.

Quote:The existence of “fried rice syndrome,” is, I think, the factoid that eviscerated my innate human curiosity, probably forever. Brought to my attention by Laurel Dunn, a microbiologist and assistant professor of food science at the University of Georgia, “fried rice syndrome” is actually just a colloquial term for vomiting and diarrhea brought on by consuming Bacillus cereus, a “Gram-positive, rod-shaped, aerobic, facultatively anaerobic, motile, beta-hemolytic bacterium,” which can survive, as a spore, being boiled and fried, then come out the other side ready to germinate and grow when left at room temperature.

Food safety experts consider the range between 41 degrees and 135 degrees Fahrenheit the “danger zone.” Keep food cold or keep it hot; there is no in between — or there is, but that’s where foodborne pathogens grow best, replicating, getting ready to hurt you, Dunn explains.

"Lukewarm food is where foodborne pathogens grow best, replicating, getting ready to hurt you"

B. cereus is one of the most common causes of food poisoning, and its presence in fried rice was first studied in 1974. Yet “fried rice syndrome” had its first big spike in Google search interest in 2007. I cannot deduce why! But then it had another in 2015, when the USDA issued a warning about preventing foodborne illnesses, specifically fried rice-borne illnesses. And then another last year, when a 62-year-old Texas woman sued her local Chinese buffet for $1 million in damages after she contracted “fried rice syndrome” that put her in the ICU for eight days.  

(My apology if you have just gorged yourself at such a place).

[pbrower2a]

Third-Biggest U.S. Coal Company Files for Bankruptcy
Gillette-based Cloud Peak Energy filed for Chapter 11 reorganization

By Associated Press // May 10, 2019

GILLETTE, Wyo. – The nation’s third-largest coal company by production volume filed for bankruptcy Friday as utility companies increasingly turn to gas-fired generation and renewable energy for electricity.

Gillette-based Cloud Peak Energy filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Delaware. The move was widely expected since at least March, when the company received the first of several extensions to make a $1.8 million loan payment.

The latest extension expired Friday.

Cloud Peak owns and operates three mines in the Powder River Basin: the Antelope and Cordero Rojo mines in Wyoming and the Spring Creek Mine in Montana.

The mines shipped 50 million tons of coal in 2018. Cloud Peak officials say the mines will remain in operation during the bankruptcy process.

https://flatheadbeacon.com/2019/05/10/th...ankruptcy/

[pbrower2a]

Here's a big one overseas:

Thomas Cook, the travel company.

LONDON (AP) — Families stranded, honeymoons and vacations canceled, thousands of workers laid off: The sudden collapse of British tour company Thomas Cook and its network of airlines and hotels sowed chaos for hundreds of thousands of travelers and businesses around the world Monday.

Brought down by a variety of factors, including crushing debts and online competition, the 178-year-old travel agency that helped pioneer the package tour ceased operating in the middle of the night. Its four airlines stopped carrying customers, and its 21,000 employees in 16 countries lost their jobs.

The company’s failure rippled across the tourism industry, particularly around the Mediterranean, with travelers uncertain how they would get home, hotels worried they wouldn’t get paid, guests afraid they wouldn’t be allowed to check out without settling their bills, and resorts hit with cancellations.

Overall, about 600,000 people were traveling with Thomas Cook as of Sunday, though it was unclear how many would be left stranded, as some regional subsidiaries were in talks with local authorities to continue operating.

The British government swung into action, lining up flights to bring an estimated 150,000 Britain-based customers back home from vacation spots around the globe in what was called the biggest peacetime repatriation effort in the country’s history.

Some 50,000 Thomas Cook travelers were reported stranded in Greece; up to 30,000 in Spain’s Canary Islands; 21,000 in Turkey; and 15,000 in Cyprus. Travelers lined up at airports, looking for other ways to get home.

James Egerton-Stanbridge and his wife, Kim, were set to fly from London’s Gatwick Airport to Egypt to celebrate her 60th birthday when flights were grounded.

“Kim was crying this morning. We’re devastated,” he said.

Other took the news in stride. Sweden’s Bengt Olsson, who was traveling in Cyprus, said there were worse places to be stranded: “It’s nice to stay here. It’s warm.”

The reality was far harsher for the Thomas Cook employees who lost their jobs overnight.

“The staff have been stabbed in the back without a second’s thought,” said Brian Strutton, head of the British Airline Pilots’ Association.

An estimated 1 million customers also found their bookings for upcoming trips canceled. Many of them are likely to receive refunds under travel insurance plans but had no idea when they would get their money back. Thomas Cook said it served 22 million customers a year.

https://apnews.com/e16341631fef4d018b4303eac161f372

Could the party be over?

[beechnut79]

We had a similar situation many years ago with the Consolidated Freighways trucking outfit. Happened over the Labor bDay holiday and when employees returned on Tuesday they found the company completely shuttered.

On a smaller scale the Candlelight Playhouse just outside Chicago closed just as abruptly in 1997.

[pbrower2a]

1. Failing to keep up with the times. Thomas Cook should have tried to compete with on-line tourist agencies.

2. Taking on debt in expectations that there would be better times.

3. Failing to control costs in the assumption that any activity is good business.

4. Failing to get help before it was too late.

Finally --

5. Sudden, catastrophic loss of credibility. 178 years of a carefully-honed reputation go into the loo.

[beechnut79]

Doesn't this sound a lot like the Sears saga?

[pbrower2a]

(09-23-2019, 10:27 PM)beechnut79 Wrote: Doesn't this sound a lot like the Sears saga?

Yes. A company lives on its reputation while gutting its assets. 

It may also be that the era of managerial elites taking advantage of economies of scale in advertising, a flat income tax that taxes corporate income just the same whether it is a mom-and-pop outfit or Exxon-Mobil, and getting away with overworking and underpaying people by limiting opportunities for advancement from within is over. 

Our business executives have become a privileged class analogous to the Soviet nomenklatura, an administrative elite that takes on characteristics of a landed aristocracy in the supposedly 'classless' society. Except -- America has become about as blatant a 'class society', complete with big rural landowners and owners of urban real estate, the latter profiteering from the concentration of certain economic activity in certain places. Small business that cannot afford a bloated bureaucracy gets squeezed out, so opportunity that used to exist for innovative and flexible people disappears.

The Soviet nomenkatura brought a rottenness that eventually made the system untenable in less than four-score years. The vestiges of free and competitive enterprise in America along with a bare-bones welfare system has kept America from going intenably rotten as quickly. In the end, what passes as conservatism in America has become the support for preservation of rot. Such conservatism is proving absurd, as rot of anything steadily destroys what it corrupts. 

One of the great myths of business is the blunder of believing that size cures everything. It does not. Structural weakness in a business grow with the enterprise. Growth cannot solve the problems of failure to invest in employees and the weakness of accounting controls. Growth cannot mitigate corruption within an old-boy network. Maybe Big Business can reshape the political orderto give it all the advantages, but that simply allows the rot to grow. 

One does not solve gangrene by overeating.

[pbrower2a]

Having to renegotiate debt payments to avoid default  is a commonplace sign of business failure.

https://finance.yahoo.com/news/u-coal-gi...07053.html

Quote:(Bloomberg) -- Murray Energy Corp., the U.S. coal giant that had pressed the Trump administration for help averting bankruptcy, may be headed toward default.



The largest closely held coal miner in America failed to make multiple payments to lenders this week, the company said in a statement on Wednesday. Creditors have agreed not to take legal action until Oct. 14, buying Murray some time to figure out how to shore up its balance sheet, the St. Clairsville, Ohio-based company said.

Murray Energy is struggling to stay afloat, along with the rest of America’s coal miners, as cheap natural gas and renewable energy resources cut into coal’s share of the U.S. power market. At least four miners including Cloud Peak Energy Inc. and Blackjewel LLC have gone bankrupt this year, laying bare the decline of a fuel that once accounted for more than half of all U.S. power generation. Today it’s less than 25%.
Prices for thermal coal -- the kind burned by power plants -- have slumped, which may have left Murray short on cash, said Lucas Pipes, a coal analyst with B Riley FBR Inc. “You can’t make payments out of thin air if the money isn’t in the bank,” he said.

Murray’s potential default comes more than a year after the Trump administration’s efforts to subsidize struggling nuclear and coal-fired power plants -- particularly ones that Murray supplies -- failed, shot down by President Donald Trump’s own appointed energy regulators. Murray Chief Executive Officer Bob Murray, an early Trump supporter and a big donor to his campaign, was instrumental in setting his energy agenda and has hosted multiple fundraisers for him.

Donald Trump certainly knows how to pick winners, doesn't he? [/snark]

[pbrower2a]

WHAT, ME WORRY?

After 67 years, Mad Magazine is going off newsstands. What will remain except to subscribers will be recycled material (which is death -- PB2a).

https://www.today.com/video/mad-magazine...s82_190816

[pbrower2a]

I saw trouble for MAD magazine when it went to more use of color. I thought the black-and-white version 'busy' enough -- color was simply an overload.

It could also be that over 67 years, tastes change... and MAD Magazine's old writers were not replaced by new ones... and the comic knack disappeared. Figuring that most of the writers and cartoonists were of the Silent Generation, the generation with the greatest knack for self-effacing comedy, the demise of the Silent generation made attempts to continue the comic effect less effective.

One competitor, CRACKED, seemed to have grown up with its youth audience.

When MAD was at its best, I saw it as good material at spoofing the bromides of the commercial mass culture and the emptiness of many political figures and causes.

In times like this, if you cannot laugh -- you get angry or you cry.

[David Horn]

(10-23-2019, 12:55 AM)pbrower2a Wrote: I saw trouble for MAD magazine when it went to more use of color. I thought the black-and-white version 'busy' enough -- color was simply an overload.

It could also be that over 67 years, tastes change... and MAD Magazine's old writers were not replaced by new ones... and the comic knack disappeared. Figuring that most of the writers and cartoonists were of the Silent Generation, the generation with the greatest knack for self-effacing comedy, the demise of the Silent generation made attempts to continue the comic effect less effective.

One competitor, CRACKED, seemed to have grown up with its youth audience.

When MAD was at its best, I saw it as good material at spoofing the bromides of the commercial mass culture and the emptiness of many political figures and causes.

In times like this, if you cannot laugh -- you get angry or you cry.

No one young enough to be attracted to Mad is interested in a paper magazine.  The humor will survive in a different form.

[pbrower2a]

True. There is video. MAD had its proprietary characters, and the people who created them are either retired or deceased. MAD did evolve in the 1950s, taking the general style that most of us know around 1960.

[Hintergrund]

(10-23-2019, 12:47 AM)pbrower2a Wrote: WHAT, ME WORRY?

After 67 years, Mad Magazine is going off newsstands. What will remain except to subscribers will be recycled material (which is death -- PB2a).

https://www.today.com/video/mad-magazine...s82_190816

MAD was kickstarted by Silents... seems their work is dying with them. Yeah, MAD often was funny, but I'd have to lie if I was saying it gave us hope. On the contrary. Maybe we're better off without it.

[Tim Randal Walker]

I am sorry about Mad. Liked it as a kid.

But I guess everything eventually runs its course.

[pbrower2a]

Art Van Furniture

Art Van Furniture, the metro Detroit-based company and the Midwest's top furniture and mattress retailer, announced Thursday it is shutting down and will begin liquidation sales at all of its company-owned stores.
The shocking announcement comes just three years after the company's sale by the Van Elslander family to a private-equity firm.

Boston-based private-equity firm Thomas H. Lee Partners bought a majority stake in Art Van Furniture in early 2017, about a year before the death of company founder Archie Van Elslander at age 87.

Art Van is expected to declare bankruptcy early next week. The filing would be a Chapter 11 reorganization, yet could potentially result in the permanent closure and liquidation of all Art Van Furniture stores — unless one or more buyers step forward to rescue the retailer.

"Despite our best efforts to remain open, the company's brands and operating performance have been hit hard by a challenging retail environment," Diane Charles, Art Van Furniture spokeswoman, said in a statement.

The liquidation sales will begin Friday at all Art Van Furniture, Art Van PureSleep and Scott Shuptrine Interiors in Michigan, Illinois, Ohio, Indiana and Missouri, as well as select Levin & Wolf stores in Maryland and Virginia. The Art Van stores are to close in 60 days.

Art Van has about 190 stores and about 3,100 employees. Twenty of the stores are franchise locations, situated in the company's "outmarkets" including the Upper Peninsula, Alpena, Mount Pleasant and Owosso in Michigan and in Indiana.

The Art Van liquidation and anticipated bankruptcy — nearly unthinkable a few years ago — marks the latest collapse of a popular and once-healthy retail brand in the wake of an acquisition by a private-equity firm. Payless ShoeSource, children's clothing store Gymboree and a well-liked New York grocery chain called Fairway Market met similar fates in recent years.

Private-equity firms use debt to acquire companies, and the debt is then owed by the company. The debt loads can leave companies with little room to maneuver if business conditions deteriorate. And any problems that arise can be exacerbated by the fees that private-equity firms ordinarily charge companies in their portfolios.

A source familiar with Art Van's finances says the company has struggled amid changes in the furniture and mattress retail business, especially the growth of online retail and decline in foot traffic at traditional brick-and-mortar stores. Gross sales have been on a downward trend, said the source, who wasn't authorized to speak on the record.
The company also may have over-expanded in recent years. Additionally, the Trump administration's tariffs on Chinese furniture imports has had a negative impact on Art Van, according to the source.

The 2017 sale price of the company was never disclosed, but was said to be over $550 million. The company at the time had more than 100 stores.

The size of the company's debt load from that deal also isn't known, and may not emerge until the bankruptcy filing.

https://www.freep.com/story/money/busine...951107002/