Jim Van Horn | Source | Partner & Bankruptcy Attorney at Barnes & Thornburg

As has happened in many past retail bankruptcies, lenders could decide ultimately that liquidating the company is the most efficient and certain way to get repaid. "Right now, the debtor [i.e., Pier 1] believes possibility of reorganizing around these remaining stores. That's what the debtor put in writing," he said. "Debtors often say that. It all comes down to economics and math, and what does the business plan look like?"

“Once we turn the corner on COVID-19 or when there is some general consensus of when things are going to get back to normal, there will be a tremendous amount of bankruptcy activity,” he said.

It appears to be a virtual certainty that Lord & Taylor will liquidate its business in the near future, either in or out of bankruptcy,” said James Van Horn, a partner at Barnes & Thornburg and a specialist in retail bankruptcy. “They were already one of the most challenged department stores prior to the coronavirus pandemic, and when the majority of the management team is leaving, the vast majority of employees are laid off and a minority of employees furloughed, there does not seem to be any other strategy but to liquidate the inventory.”

Mr. Van Horn said he expected other chains might strategically employ Chapter 11 reorganizations in order to legally shed stores, lightening their rent burden.

“It will likely be a domino that falls,” he said. “Whether it is first or 10th, we don’t know.”