Top 5 Companies That Went Bankrupt During The Pandemic


jc penny

Bankruptcy is a real risk for any company, says Boulder bankruptcy attorney Moorhead Law. Regardless of size or industry, there’s always a chance that a series of unfortunate events could send your venture careening over that proverbial edge. That’s doubly true now that the Coronavirus pandemic has made the business world a more precarious place, and as these following five examples will expertly demonstrate.

J. Crew

Even prior to the COVID-19 pandemic, things were looking precarious for J. Crew as they had started amassing substantial debt (some $2 billion or so). The pressures of Coronavirus sent things over the edge, and on May 4, 2020, J. Crew filed for Chapter 11 bankruptcy protection. Meanwhile, J. Crew’s largest lender—Anchorage Capital Group—has taken over as its majority owner, converting about $1.6 billion of that debt into equity. 

J. Crew was able to exit bankruptcy in September of 2020, stating that they were “well positioned for long-term growth. They’re capitalized with a $400 million exit term loan along with a new ABL credit facility. They’re expecting to turn things around by targeting new areas for growth and expansion within the purview of their brand.

J.C. Penney

As a retailer, J.C. Penney has near-mythical status in the minds of many who grew up with the stores being a fixture in their lives. Being a legend wasn’t enough to save J.C. Penney from struggling against competitors like Amazon, however, and in May of 2020 they had to file for bankruptcy. Thankfully for the company, they were able to exit bankruptcy on December 7th of the same year, but they’ve still got a long road ahead if they’re going to recover.

Hertz

The name Hertz is almost synonymous with rental cars, but over the course of the pandemic the company became known for something quite a bit different. With everyone taking steps to mitigate their exposure to the virus, travel dropped, and along with it the need for car rentals.

With car rentals and used car sales down, Hertz had no choice but to file for Chapter 11 bankruptcy on May 22, 2020—with about $20 billion of debt. In fact, it wasn’t until June 30, 2021 when Hertz announced that they were finally exiting Chapter 11, now a “much stronger company.” It remains to be seen if the company can maintain profitability moving forward.

Chesapeake Energy

The pandemic even affected people’s energy consumption, and one of the hardest-hit natural gas producers was Chesapeake Energy. A combination of falling gas prices and deep debts from a history of overspending on deals left this energy company in dire straits—to the point where they had to file for Chapter 11 bankruptcy in June 2020. 

Though they’ve had to dismiss hundreds of workers, Chesapeake also managed to exit bankruptcy in mid-January. They did so with a new focus on environmental responsibility and greenhouse gas reduction, along with a new capital and cost structure moving forward.

GNC Holdings

You may well know GNC for their nutritional supplements and vitamin products, but the company faced mounting burdens in the midst of COVID-19, and with $900 million in debt, they entered bankruptcy in June of 2020. Thankfully, they were able to sell themselves to their largest shareholder—the Chinese pharmaceutical giant Harbin—while they right the ship.