Many businesses are exhaling now that much of the country is opening back up. This week, Moderna’s CEO said it’s reasonable to think the COVID-19 pandemic is in its end stages, and states around the country are dropping mandates and easing restrictions. Still, a surprising number of companies didn’t make it through the pandemic in one piece. Here are the bankruptcies that caught my attention in this week’s Five For Friday.
#5: Pier 1 Imports
Pier 1 Imports was in trouble before the pandemic even began. The company had filed for bankruptcy in February 2020 and had already closed nearly half of its stores. COVID-19 was the final nail in its coffin. Unable to compete with online-only retailers like Amazon and Wayfair and big-box stores like Target, Pier 1 had to scrap bankruptcy restructuring altogether and liquidate. You won’t see Pier 1 in shopping centers anymore, but Retail Ecommerce Ventures, which paid $30 million for the name and intellectual property, relaunched the company as an online-only operation.
The Texas-based pizza chain will never look the same. While most pizza joints seemed tailor-made for pandemic lifestyle, Cici’s famous $5 all-you-can-eat pizza buffet didn’t translate as well for takeout and the chain filed for Chapter 11. D&G Investors acquired the company’s debt and are operating the slimmed-down restaurant chain, betting on a return to dine-in service.
#3: Gold’s Gym
Unlike many on the bankruptcy list, Gold’s Gym was not struggling before the pandemic. In fact, the company reported its strongest-ever year of growth in 2019. But social distancing and closures hit its business like a 400-pound dumbbell. After filing for bankruptcy, European fitness company RSG bought the chain through a court auction for $100 million. Now, RSG is bringing a nightclub gym vibe to the U.S. with its new franchise.
You’d never guess the rental car company recently emerged from bankruptcy if you consider the star power in one of its latest commercials, featuring Tom Brady, or its major deal with Tesla in 2021. But Hertz was one of the first major companies to file Chapter 11 when travel halted. Today, the company has a completely different story to tell. Have you tried renting a car recently? Hertz is greatly benefitting from surging prices for rental and used cars. Even the bankruptcy judge was impressed by this turnaround.
#1: Guitar Center
The shutdown was a great opportunity to pick up a new instrument, but shoppers avoided malls like, well, the plague. Unfortunately for Guitar Center, most of its hundreds of locations were inside those malls. Post-bankruptcy, the court approved a plan that wiped out more than $800 million in debt and within a year, Guitar Center went from filing for bankruptcy to filing confidential paperwork with the SEC to go public.