Forever 21 announced that their organization was declaring bankruptcy…but it was business as usual more than a week later at many of their stores across the country.
It Takes Two with Amy and JJ decided to do some investigating on why a retail store that declares bankruptcy can still be open. Shouldn’t they be selling their merchandise and fixtures to pay off the debt? What’s going on?
Dr. Fariz Huseynov, an Associate Professor of Finance at North Dakota State University, sheds some light on the subject – plus, we get into a conversation about shopping malls and whether or not they have a future in the ever changing world of retail.
For starters, and these are detailed in the podcast, there are different types of bankruptcy. You may have heard people use term Chapter 7 – well depending on the type of bankruptcy that a business uses, the rules are different.
In the case of Forever 21, they declared Chapter 11 which allows a period of time to restructure their current debt and pay off creditors over time. For example, during this period individual stores will ask their landlords to renegotiate the terms of their lease. Shorter timeframes or a smaller amount of rent. If they are unable, the store would likely close.
Educate yourself by listening to this informative podcast and create a better understanding the next time you hear about a company declaring bankruptcy!
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(Amy Iler & JJ Gordon are talk-show hosts at 790 AM KFGO in Fargo-Moorhead. “It Takes 2 with Amy & JJ” can be heard weekdays 11am-2pm. Check out the show page on
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Follow Amy on Twitter
@AmyKFGO
. Follow JJ on Twitter
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