It is no secret that the American economy has gone through some trials and tribulations over the last several years. The economic recession was one thing, but with the proliferation of Internet use for shopping and other changing consumer trends, many business owners may find it hard to predict where the next profitable path forward may be. And, in some instances, changing economic trends and conditions can leave some companies with no other choice but to pursue a bankruptcy filing.
This seems to be what has happened with Love Culture, the women's clothing store that can be found in malls throughout America, including in many malls in California. According to recent reports, the clothing chain that includes 82 locations has filed for Chapter 11 bankruptcy. The reports indicate that a surge of "overexpansion" played a significant role in the company's current financial dilemma.
With the choice already made that filing for Chapter 11 bankruptcy is the way to go, Love Culture, like other companies that find themselves in this position, will now be faced with some hard choices. For starters, at the beginning of the Chapter 11 process most companies are still deciding whether or not it makes sense financially to attempt to restructure the company, or whether it makes more sense to simply sell.
For Love Culture, the reports indicate that several store location will be closed while the company attempts to undergo a debt reorganization process. But, perhaps more significantly, it appears that there may be some parties interested in buying the clothing chain outright, which, for many companies in this type of situation, can be a very enticing option when compared to the long and oftentimes complex process of a Chapter 11 filing.
Source: Reuters, "Clothing chain Love Culture files bankruptcy, may be sold," Jonathan Stempel, July 16, 2014