Five Major Corporate Bankruptcies of 2009
Six Flags
It seems as though Six Flags, an amusement park chain with 20 theme parks operating throughout the US, has recently gone on a bit of a financial rollercoaster ride. With a staggering $1.8 billion worth of debt, Six Flags has finally decided to go into Chapter 11 bankruptcy protection. The company has stated that while they are in dire need of reorganization, the filing will not affect the operations of its existing parks. The amusement park giant's shares have traded below $1 since September 2008, closing at a measly 13 cents on July 7th.
Chrysler
Chrysler, the third-largest automaker in the US, filed Chapter 11 bankruptcy on April 30, 2009. This move marks the first instance of bankruptcy for a major American manufacturer since Studebaker in 1933. This is not the first time that Chrysler has come close to financial ruin; in 1979, during the Carter administration, the manufacturer also came dangerously close.
President Obama became highly involved with the events surrounding the 2009 bankruptcy, and in the end decided to lend the company an additional $8 billion on top of the $4 billion already provided; thereby ensuring that all Chrysler warranties would be backed by the US government. Chrysler is hopeful that they will be able to emerge from their bankruptcy protection by late August.
Eddie Bauer
This outdoor apparel retailer, which began as a sport shop in Seattle in 1920, has recently filed for bankruptcy for the second time in six years. As the economy has declined during the last few years, non-necessity retailers have felt the pinch as consumers are thinking twice these days about making purchases based on brand alone. Bauer recently recovered from Chapter 11 bankruptcy in 2005 after former owner Spiegel Catalog filed for bankruptcy in 2003.
With more than $300 million in outstanding debt (according to SEC filings), Bauer has recently found a suitor in CCMP Capital Advisors, LLC. CCMP, a private equity firm based in Canada, has proposed a $202 million cash asset purchase agreement.
Circuit City
The well-known nationwide electronics retailer announced in January 2009 that they would be closing the 567 stores operating in the United States and liquidating all merchandise amongst four different retailers. After failed attempts to reach any agreement with their creditors, they were unable to secure a going-concern transaction.
Although all US stores were liquidated and shut down, the nearly 800 stores operating in Canada remain open. Some suggest that the recent shift towards purchasing electronics online and fierce competition for a narrowing retail market are what ultimately drove Circuit City to its demise.
Fortunoff
On February 5, 2009, Fortunoff, a New York-based retailer of jewelry, home and furniture stores, filed for Chapter 11 bankruptcy protection. Much to consumers' dismay, the company stopped honoring all gift card purchases within two weeks of its bankruptcy announcement. All 34 of Fortunoff's retail, full-line, and specialty stores were liquidated by June 2009. The retailer attributed its downfall to increasing partnership costs with Lord & Taylor, lack of borrowable funds due to the recession, and a sub-par holiday purchases during 2008.
