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The 5 most startling Chapter 11 retailer bankruptcies since 2020

The pandemic sent waves through the economy, and since its onset, many businesses have filed for Chapter 11 bankruptcy. These are five of the most surprising…

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When a business files Chapter 11 bankruptcy, that doesn’t mean it has declared itself kaput — far from it. 

Filing Chapter 11 is like sending out a SOS signal: It allows the business to keep operating while attempting to restructure operations and pay down its debts (unlike a Chapter 7 bankruptcy filing, which closes the company and liquidates its assets). The recovery rate of a business filing Chapter 11 is said to be anywhere between 10% and 40%.

But no two Chapter 11 bankruptcies are alike. You might be surprised to hear that some of the world’s largest companies — such as American Airlines, Marvel Entertainment, and General Motors — have filed Chapter 11 at one point, but through mergers, new revenue streams, or simply by operating smarter, all managed to crawl back to profitability. 

Other big names weren’t as fortunate: Funeral rites were observed for Lehman Brothers and WorldCom, for example, because they had been operating fraudulently — even though some argued, in the case of Lehman, that they were “too big to fail.”

How many businesses have filed Chapter 11 since the COVID-19 pandemic?

The COVID-19 pandemic, caused by the SARS-CoV-2 virus, not only made millions of people very sick; it also had a profound impact on the way we live, work, and shop. At the onset of 2020's stay-at-home-orders, hundreds of restaurants shuttered, including household names like Ruby Tuesday, California Pizza Kitchen, and Sizzler. 

According to U.S. Federal Courts, business Chapter 11 filings spiked in 2020 while Chapter 7 filings actually decreased. But as vaccines were developed and people returned to work and school, they also resumed their former shopping habits — in fact, mall traffic in 2023 was down only 5.8% compared to 2019, which is much better than it was in 2021, when it was off 15%. 

Yet more turbulence was felt in the years following the pandemic, as government stimulus from the CARES Act, which had helped many businesses make payroll and meet other operating expenses, expired in 2021.

Bankruptcy filings by chapter 2019–2023

Source: U.S. Courts

YearChapter 7Chapter 11

2023

261,277

7,456

2022

225,455

4,918

2021

288,327

4,836

2019

480,201

7,020

Through such choppy waters, we examine a few of the biggest-name retailers that went belly up  — and which ones have risen from the ashes under new management.

5 big-name Chapter 11 bankruptcies in retail

Rite Aid plans to close roughly 10% of its 2,300 locations in 2024.

FREDERIC J. BROWN/AFP via Getty Images

Rite Aid

It was the country’s third-largest drugstore chain — only Walgreens and CVS were bigger — but thanks to sluggish sales, mounting debt, and federal investigations into whether it illegally filled prescriptions during the opioid crisis, Rite Aid filed Chapter 11 in October 2023. 

Earlier in the year, the chain had reported a $241 million quarterly loss due in part to a reduction in revenue from COVID-19 vaccines and rapid tests. Rite Aid simply couldn’t keep up with the convenience of shopping at the pharmacies at big-box stores like Walmart, Target, and Costco. 

As part of its Chapter 11 agreement, the company secured $3.5 billion in financing and appointed a new chief executive, Jeff Stein, to lead its corporate reorganization. Rite Aid also planned to close 200 stores in 2024 but not before transferring customer prescriptions to nearby pharmacies. In addition, it gave its 45,000 employees the option to transfer to other stores “when possible.” 

Who would have thought that Bed Bath & Beyond would get scooped up by one of its biggest competitors?

Bed Bath & Beyond

Many people thought Bed Bath & Beyond’s days were numbered when it filed Chapter 11 in April 2023 — after all, it closed all 376 stores across the U.S., and its stock was terminated from the over-the-counter trading market. This came after reporting a quarterly loss of $393 million and on the heels of several years of declining sales, competition from online home goods retailers like Wayfair, and a snarled COVID-19-related supply chain

Plus, who could forget BBBY’s meme stock trading frenzy in January 2021, when Reddit contributors drove up prices 99%, only to come crashing back down? When the dust settled, Overstock bought the business for a blue-light special of $21.5 million in June 2023, then took its name and merged businesses. 

Bed, Bath & Beyond now sells kitchen, bath, and furniture completely online and has added more than 600,000 new products to its inventory.

J. Crew is using big discounts to lure back customers.

J. Crew

The first big retailer to capsize during the pandemic, J. Crew filed Chapter 11 in May 2020. But it wasn’t only the fact that retail sales in general withered at the start of COVID-19 — the Commerce Department reported a 50% decline in sales in March 2020 alone — J. Crew had also been saddled with $1.7 billion (that’s with a b) in long-term debt, which weighed heavily on its balance sheet even while its operations were profitable. 

The upscale lifestyle apparel seller received a $400 million line of credit from hedge fund Anchorage Capital Management, which became majority owner and, combined with additional loans from Davidson Kempner Capital Management LP and Bank of America, managed to convert its debt into equity, exiting bankruptcy proceedings that August. 

But J. Crew is not out of the woods. Ever since creative director Jenna Lyons left in 2017, it has yet to come out with a line of clothing consumers want to pay full price for, and Standard & Poor’s downgrade of parent company Chinos Intermediate 2 LLC from “stable” to “negative” in the third quarter of 2023 raised alarm bells. 

However, the preppy chain posted a 9% sales increase for its fiscal year ending February 1, 2024,  due in part to holiday sales, which slashed apparel prices by as much as 75%. Paradoxically, J. Crew just might now be one of the best stores to shop at for discounts.

The beleaguered clothing stalwart has ambitious plans for 2024.

Justin Sullivan/Getty Images

JCPenney

You’d think a company that survived two World Wars and made a cameo in "Back to the Future" could stand the test of time — and it just well might. Founded in 1902 by James Cash Penney as a dry goods store in Kemmerer, Wyoming, the chain expanded throughout the American West before introducing clothing to its lineup in the 1960s. 

Wisely venturing into the pharmacy business, launching a mail order catalog, and offering customers the option to make their purchases through credit paid off in spades, Penney’s peaked in the 1970s with more than 2,000 stores worldwide. But after decades of declining sales, accumulating a boatload of debt during the 2007-2008 financial crisis, and losing customers in droves to Target and Walmart (a familiar refrain), the COVID-19-related closure of Penney’s 800 remaining stores in early 2020 seemed like the final nail in the aging retailer's coffin. 

JCPenney filed Chapter 11 that May, only to emerge, phoenix-like, eight months later. The brand permanently closed 200 stores, restructured its $4 billion debt, and took on two new owners — they just happened to be the country’s largest shopping mall owners, Simon Properties and Brookfield Asset Management, thus ensconcing Penney’s place as a retail “anchor.” 

In 2021, Mark Rosen, formerly of Levi Strauss & Co., became CEO, and in 2023, he announced $1 billion worth of upgrades to the JCPenney website and app, as well as renovations of its brick-and-mortar stores. Here’s the cincher: Doing so wouldn’t require taking on any more debt. “We’re in a really strong financial position right now,” Rosen said.

The COVID-19 pandemic boosted Guitar Center's online sales but couldn't replace losses from its store closures.

AaronP/Bauer-Griffin/GC Images

Guitar Center

It’s hard to believe this mecca for rock n’ roll musicians was originally called Organ Center and sold church organs and small appliances. That all changed in 1964, shortly after The Beatles came to America, when one of owner Wayne Mitchell's vendors told him that he needed to buy Vox amplifiers in order to continue purchasing organs. 

Mitchell figured that if he was selling amps, why not stock a few guitars, too? They quickly sold out; Mitchell changed his store’s name, and the rest was history. Riding the hair metal craze of the 1980s that glorified guitar virtuosos like Eddie Van Halen, Guitar Center expanded into 30 locations by the 1990s. It also diversified its portfolio with acquisitions of Musician’s Friend, a mail-order musical instrument company; Music & Arts, which provided in-store music lessons; and in the early 2000s, partnered with Activision, the video gaming giant, on its smash hit “Guitar Hero.” 

But the good times and rock & roll didn’t last forever. Over the next decade, Guitar Center underwent a series of leveraged buyouts from private equity firms, each time saddling it with more debt. It tried cutting costs by stocking fewer name brands and laying off staff — many of whom had decades of experience that justified their salaries. 

Customers noticed the changes and simply stopped coming, shopping online instead. But right before the pandemic, Guitar Center staged a comeback, posting 10 straight months of sales growth, but while new audiences were found for guitars and online lessons during the COVID-19 lockdown, Guitar Center faced the double whammy of seeing $1 billion in debt come due and the closure of its brick-and-mortar stores. 

It entered Chapter 11 in November 2020, although its management team already had a strategy in place. It invested $165 million in the company while eliminating most of its debt. Guitar Center also issued $375 million in senior secured bonds and exited Chapter 11 that December.

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HKUMed’s innovative platforms rapidly track SARS-CoV-2 mutational impact on disease severity and identify effective therapeutic inhibitors

A multidisciplinary research team from the LKS Faculty of Medicine (HKUMed) and the Faculty of Engineering of the University of Hong Kong (HKU) has successfully…

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A multidisciplinary research team from the LKS Faculty of Medicine (HKUMed) and the Faculty of Engineering of the University of Hong Kong (HKU) has successfully developed an innovative screening platform to rapidly assess the impact of SARS-CoV-2 mutations on disease severity. Compared to traditional methods, this platform has achieved a speed improvement of up to 39 times. Additionally, the researchers focused on understanding how mutations affect syncytium formation, a process known as cell fusion in which infected cells fuse with uninfected cells. This research helps identify emerging viral variants that could pose a significant risk to public health. The team has also identified two FDA-approved drugs that can ease disease severity. The findings were published in Nature Biomedical Engineering [link to publication], and a patent application has been filed based on the research.

Credit: The University of Hong Kong

A multidisciplinary research team from the LKS Faculty of Medicine (HKUMed) and the Faculty of Engineering of the University of Hong Kong (HKU) has successfully developed an innovative screening platform to rapidly assess the impact of SARS-CoV-2 mutations on disease severity. Compared to traditional methods, this platform has achieved a speed improvement of up to 39 times. Additionally, the researchers focused on understanding how mutations affect syncytium formation, a process known as cell fusion in which infected cells fuse with uninfected cells. This research helps identify emerging viral variants that could pose a significant risk to public health. The team has also identified two FDA-approved drugs that can ease disease severity. The findings were published in Nature Biomedical Engineering [link to publication], and a patent application has been filed based on the research.

Background
The SARS-CoV-2 virus, which caused the worldwide COVID-19 pandemic, has been continuously evolving since its emergence. Spike protein mutations can lead to different degrees of infectivity and lethality. The spike protein plays a crucial role in viral infection by binding to human ACE2 receptors and merging with neighbouring uninfected cells to form syncytia, which contribute to virus spread and disease severity. Scientists have discovered that severe COVID-19 cases often exhibit syncytium cells in the lungs, providing evidence of the connection between spike-driven cell fusion and infection severity.

Large-scale screening to assess cell-cell fusion is challenging, as it requires a rapid way to measure the fusion process. Previous studies individually constructed and monitored spike variants to assess their potential to form syncytia, which was both technically demanding and costly. To address this, the research team used innovative screening methods and advanced genetic techniques to identify the specific genetic and cellular factors responsible for promoting syncytia formation. This research is crucial for developing effective interventions and treatments to block the fusion and potentially restrict virus spread.

Research findings
The team used a special system involving split green fluorescent protein (GFP), which produces detectable signals when cells fuse together. They combined it with a microfluidics-based system and large-scale mutagenesis to create a new platform for rapid screening and analysis of a wide range of spike protein variants and their fusion capabilities.

By studying the spike protein and its mutations, researchers have found that certain variants, such as the Delta strain, form larger syncytia than the original strain of the virus. They discovered that a single K854H mutation can transform the Omicron variant into a strain that forms fusions from a low rate to a high rate. Furthermore, some mutations found in the study were predicted to be as mutable as those seen in the previous variants, such as Omicron and Delta, revealing that these new mutations should be kept under surveillance as they could emerge in future viral evolution.

To enhance the efficiency of the screening process, the team developed a new strategy using size-exclusion selection to sort fused and unfused cells on a large scale, which enabled speedy screening. This method achieved over 80% in accuracy rate, comparing with the traditional approach.

Employing the size-exclusion selection strategy, the team conducted a genome-wide CRISPR screen and identified two cellular factors, AP2M1 and FCHO2, involved in cellular uptake mechanism, which contributes to syncytium formation. The researchers then tested two FDA-approved drugs, chlorpromazine and fluvoxamine, currently used for antipsychotic purposes, to inhibit cellular uptake. Experiments on hamster models showed that these drugs could inhibit syncytium formation induced by the spike protein and potentially alleviate disease severity.

Significance of the study
The significance of this study lies in its interdisciplinary approach, combining high-throughput CRISPR screening, large-scale mutagenesis, droplet microfluidics, and virology. The droplet microfluidics system enabled the study of cell-cell interactions in a high-throughput manner and provided high-resolution data. The paired-cell system has the potential to systematically profile the fusogenicity of various viruses, including HIV, RSV, Herpesviridae, SARS-CoV-2 and other coronaviridae that induce syncytium formation. The combination of high-throughput profiling systems and CRISPR screening led to the discovery of a potential therapeutic target to combat syncytium formation and reduce the severity of SARS-CoV-2 infections.

Professor Alan Wong Siu-lun, Associate Professor in the School of Biomedical Sciences, HKUMed, who led the research, stated, ‘These innovative systems enable us to rapidly track SARS-CoV-2 mutations on a larger scale and identify treatment options; they can also be broadly applied in the study of various pathological and physiological cell fusion conditions relevant to biomedical research, including cancer immunotherapy.’

Looking forward, he added, ‘The methods and knowledge gained from this study have the potential to contribute to public health efforts and provide insights into the development of therapeutic interventions for COVID-19 and other diseases involving cell fusion.’

About the research team
The HKU collaborative research team was led by Professor Alan Wong Siu-lun and Dr Gigi Choi Ching-gee from the School of Biomedical Sciences, and Professor Chu Hin from the Department of Microbiology, School of Clinical Medicine, HKUMed; together with Professor Anderson Shum Ho-cheung, Department of Mechanical Engineering, Faculty of Engineering. The collaborative research team also includes Charles Chan Wai-fong, Wang Bei and Dr Chu Hoi-yee from the School of Biomedical Sciences, and Dr Huang Xiner and Luo Cuiting from the Department of Microbiology, School of Clinical Medicine, HKUMed; and Dr Lang Nan and Mao Tianjiao from the Department of Mechanical Engineering, Faculty of Engineering.

Acknowledgements
This research was supported by the National Natural Science Foundation of China (Excellent Young Scientists Fund); the Centre for Oncology and Immunology, and the Advanced Biomedical Instrumentation Centre, under the Health@InnoHK Initiative funded by the Innovation and Technology Commission, the Government of Hong Kong SAR; and the Collaborative Research Fund under the Hong Kong Research Grants Council.

Media enquiries
Please contact LKS Faculty of Medicine of The University of Hong Kong by email (medmedia@hku.hk).


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MSM Trots Out ‘Bird Flu-Pocalypse’ After Texas Dairy Worker Falls Ill

MSM Trots Out ‘Bird Flu-Pocalypse’ After Texas Dairy Worker Falls Ill

Bird flu is back in the news after a Texas dairy worker tested positive…

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MSM Trots Out 'Bird Flu-Pocalypse' After Texas Dairy Worker Falls Ill

Bird flu is back in the news after a Texas dairy worker tested positive for the virus in the first documented case of bird-cow-human transmission.

So of course, a cacophony of 'experts' are now warning that a bird flu pandemic could be '100 times worse' than COVID.'

Mentions of "Avian Flu Virus" in the news

"This virus [has been] on the top of the pandemic list for many, many years and probably decades," said Pittsburgh bird-flu researcher Dr. Suresh Kuchipudi, during a recent panel cited by the Daily Mail.

"And now we’re getting dangerously close to this virus potentially causing a pandemic," he continued. "So therefore, in my view, I think this is a virus that has the greatest pandemic threat [that is] playing out in plain sight and globally present."

The Mail also cites pharmaceutical vaccine consultant and BioNiagra founder John Fulton, who said during the same meeting: "This appears to be 100 times worse than COVID — or it could be if it mutates and maintains its high case fatality rate."

"Once it’s mutated to infect humans, we can only hope that the [fatality rate] drops," he added.

Meanwhile there's this Feigl-Ding, who rose to e-prominence during the pandemic as an extreme fear monger:

Approximately 52% of those who have contracted H5N1 since 2003 have died, according to the WHO

Via the Daily Mail

That said, according to CDC Director Mandy Cohen, "the whole  U.S. government is taking this situation very seriously," but the virus does not pose much of a risk to the general public. That said, they did just warn not to drink raw milk.

Another voice calling for calm is David Swayne, who has worked on bird flu cases in animals for decades.

"Right now, for the cattle cases — there is no knowledge, so that's easy for the alarm to be raised," he told the Mail. "There is a huge lack of knowledge that we need to fill."

"Let's look at the facts and look at them with reason, we don't really know that much today because of the knowledge gaps that we need to fill."

Others such as UK-based epidemiologist Dr Francois Balloux posted to X: "'People not professionally involved in pandemic prevention/mitigation being worried/feeling miserable now won't make any material difference to what may hit us, except that their life would suck, far more than it should."

Perhaps that will change in time for the 2024 election if the 'gain-of-function' guys have their way with it.

Tyler Durden Thu, 04/04/2024 - 16:40

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Perinatal women of Mexican descent propose solutions to pandemic-related stressors affecting Latinos

CHAMPAIGN, Ill. — Public policies blocked many families of Mexican descent living in the U.S. from accessing vital services such as food and mental health…

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CHAMPAIGN, Ill. — Public policies blocked many families of Mexican descent living in the U.S. from accessing vital services such as food and mental health care during the COVID-19 pandemic, even though these communities experienced some of the highest infection and mortality rates.

Credit: Photo by L. Brian Stauffer

CHAMPAIGN, Ill. — Public policies blocked many families of Mexican descent living in the U.S. from accessing vital services such as food and mental health care during the COVID-19 pandemic, even though these communities experienced some of the highest infection and mortality rates.

Thirty-eight perinatal women and mothers of young children were interviewed about the challenges they faced during the pandemic and proposed solutions to better meet the needs of their communities during future large-scale crises in a study led by University of Illinois Urbana-Champaign kinesiology and community health professor Sandraluz Lara-Cinisomo.

Co-authors of the study are molecular anthropologist Amy L. Non of the University of California-San Diego; Kimberly D-Anna-Hernandez, a professor of psychology at Marquette University; and U. of I. graduate student Mary Ellen Mendy and undergraduate students Jessica Avalos and Jacqueline Marquez.

The women in the study discussed the stressors they encountered during the pandemic, including their difficulties accessing mental health treatment, child care and food. Their suggestions and insights were used to identify actionable policies and programs that could help meet the needs of Latino communities during future emergencies.

The participants, who were interviewed between September 2021 and December 2022, were part of a longitudinal study that recruited them from a clinic in San Diego, one of the U.S. cities with large Latino populations of Mexican heritage.

The women were about 36 years old on average. Although about 81% of them were born in Mexico, many had resided in the U.S. for 17 years or more. About 31% reported having an annual household income of less than $21,000, while a similar percentage earned $40,000 or more, according to the study.

Lara-Cinisomo said participants faced complex stressors during the pandemic. Half of the women in the study said their families had challenges obtaining food due to loss of income and subsidies such as school lunches, as well as supply chain shortages and consumer stockpiling.

“While early in the pandemic various federal and state programs and policies were deployed to mitigate people’s risks for exposure and enhance families’ economic security, millions of tax-paying families of Mexican descent and other Latino backgrounds were excluded because of restrictions and exclusions set by those programs,” Lara-Cinisomo said.

The researchers found that more than twice as many Spanish speakers reported food-related issues compared with their English-speaking counterparts.

“Policymakers should consider how language barriers increase the risks of Spanish-speaking families losing out on benefits designed to meet their needs, such as CalFresh,” California’s iteration of the federal SNAP food assistance program for low-income people, Lara-Cinisomo said.

“Communicating food and health and safety information in linguistically appropriate media, such as texts, videos or commercials, is vital to ensure accessibility to people with differing literacy and technological skills and should be carefully considered by policymakers.”

Involving trusted sources in disseminating relevant and critical information was also recommended by the participants. For marginalized communities that have experienced historical discrimination and anti-immigrant propaganda, trust in these sources is vital, Lara-Cinisomo said.

“Research has shown that community engagement is critical in emergency preparedness and increases the likelihood of meeting the needs of marginalized communities,” Lara-Cinisomo said. Accordingly, she and her team recommended developing a contingency plan to train culturally and linguistically competent community health workers to cultivate networks of trusted community members to assist in crisis communication efforts.

Some women discussed feeling anxiety about the uncertainties associated with the pandemic, such as lockdowns and conflicting health information. These feelings were exacerbated by employment disruptions, pregnancy, and food access problems, and their concerns extended to family members residing in other households and those living in Mexico, participants told the researchers.

The majority of those interviewed advocated broadening access to food subsidy programs such as WIC and SNAP to offset income losses and food shortages during large-scale crises, along with providing public awareness campaigns about local food banks and assistance programs.

Even though California provides more services for undocumented immigrants — including paid family leave and one year of emergency coverage with mental health services under Medi-Cal, the state’s Medicaid plan, for pregnant women — caring for their mental health needs was a significant problem for many participants. Fifteen women reported needing mental health care, but twice as many of the English-speaking women mentioned these issues compared with their Spanish-speaking counterparts, the researchers found.

The researchers hypothesized that this difference may have been associated with cultural beliefs, with Spanish-speaking women feeling less comfortable disclosing mental health problems because of stigmatization compared with those who spoke English. Or, it may have been that those who spoke Spanish were more resilient or more concerned about immediate needs such as food assistance, the team said.

Participants recommended broadening access to mental health services for mothers and their families, promoting awareness with providers and patients, and disseminating mental health information and resources through videos and other media and via programs such as WIC.

Many of the women — largely those who spoke only Spanish — reported difficulties obtaining personal protective equipment and sanitization supplies because of shortages, consumer stockpiling, and price gouging, in keeping with other studies that showed low-income and marginalized communities were disproportionately affected.

Although the study sample was small, Lara-Cinisomo said it highlighted critical needs for responsive, culturally appropriate policies and programs to ensure the well-being of Mexican-descent perinatal women and mothers of young children during public health crises.

Lara-Cinisomo discussed the team’s findings and study participants’ recommendations during a virtual Briefing on Perinatal Health and Well-being on April 3 hosted by the journal Health Affairs, which published the study.


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