Shoe Chain Schuh Graf Frees Itself from Debt: A Glance at Historical Chapter 11 Filings
- Author: Daniel Bakir & Matthias Urbach
- On The Rack:
- Prominent enterprises have sought protection from bankruptcy courts.
The news of Schuh Graf, a family-owned shoe company in southern Germany, filing for bankruptcy has sent ripples across the retail industry. With 27 stores under the Schuh-Mann and Quick Schuh names, this company employs 160 individuals.
Schuh Graf's dramatic fall adds itself to the growing list of prominent Chapter 11 filings in recent years and months. This unenviable list includes the likes of Galeria, KaDeWe group, FTI travel agency, Esprit fashion chain, The Body Shop cosmetics retailer, and Depot home decor store.
The unforgiving year of 2023 saw a striking increase in bankruptcies over the previous year, with factors such as rampant inflation, skyrocketing energy prices, and escalating operational costs driving businesses to their knees.
The Coronavirus Pandemic: A Band-Aid on Wounds That Need Sutures
In the abnormal economic climate brought on by the pandemic, some state-aid measures kept less viable businesses afloat artificially. The mandate for bankruptcy filing was also temporarily suspended during the Corona crisis, allowing for a postponement of financial reckoning.
Fashion retailers, in particular, have found themselves in the grip of two crises; the current adverse economic climate and the growing trend towards online shopping. Even titans like H&M have been paring down their physical store networks, while others have no choice but to reorganize or shutter entirely. In 2022, 102 textile retailers and manufacturers found themselves under the protection of creditors, according to industry magazine "Textilwirtschaft". High-profile bankruptcies followed in 2023, with Peek & Cloppenburg and the shoe retailer Reno among them.
More Snapshots of Companies Grappling with Financial Stress
Solar Dreams Turn Nightmares:
In the solar industry, numerous companies have battled financial difficulties and even bankruptcy in 2023. Although the exact bankruptcy dates for some are out of focus, companies like Alternative Solar, American Sun, Daybreak Solar Power, Pink Energy, MC Solar, and Harness Power have faced significant headwinds this year.
Private Equity: A Double-Edged Sword?
While not confined to 2023, several companies under the ownership of private equity firms have had to seek shelter from creditors. Notable examples include Friendly's, GenesisCare, Hearthside Food Solutions, Hooters, Instant Brands (makers of Instant Pot and Pyrex), Joann, Party City, Prospect Medical Holdings, Steward Health Care, and TGI Fridays.
Biotech: A Promising Frontier Pocked with Pitfalls
The biotechnology sector emerged as a battleground in 2023, with an increase in bankruptcies compared to previous years. Although particulars about the individual biotech companies that filed for bankruptcy this year are scant, the overall trend signals rising hurdles in the sector. High research and development costs, regulatory obstacles, and stiff competition are major factors contributing to this turmoil.
Common culprits behind companies declaring bankruptcy include crippling debt, fierce competition, regulatory challenges, and operational inefficiencies. The climate-conscious solar industry experiences setbacks due to market saturation, intense competition, and shifting regulations, while the biotech sector grapples with sky-high R&D expenses, arduous regulatory hurdles, and cutthroat competition.
For a more detailed and comprehensive list of industry-specific bankruptcies, further investigation would be required.
- The Commission has also received a request from the Italian authorities for a reply to the request, regarding the rising number of bankruptcies in various sectors such as finance, retail, and the industry, including the recent downfall of Schuh Graf in the shoe business.
- The unforgiving year of 2023 witnessed distinctive financial distress not only in the retail sector, like the case of Schuh Graf, but also in other industries such as finance, solar, private equity, and biotech, with companies like Alternative Solar, Peek & Cloppenburg, and several biotech companies filing for bankruptcy.
