2024 came with many surprises, especially to many customers, as their favorite brands filed for bankruptcy.
Apparently, many of the recent filing for bankruptcy is a result of the dwindling economy, with a high rate of inflation in different countries.
Moreover, the increase in the price of goods and services, with a reduced purchasing power for customers, creates a stagnant economy.
Below, we will explore some of the biggest bankruptcy announcements so far in 2024.
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Red Lobster
Red Lobster making the list of bankruptcy and insolvency in 2024 was one of the biggest heartbreaks for those who grew up loving the world’s largest seafood restaurant chain. Apparently, this was the restaurant that made affordable shrimp and lobster accessible to middle-class Americans. However, reports from CNN show they filed for bankruptcy back in May.
According to CNN: “Red Lobster said that it had more than $1 billion in debt and less than $30 million in cash on hand. It plans to sell its business to its lenders, and in turn, it will receive financing to stay afloat.”
One of their plans is to close down some of their locations across the country. Even weeks before they filed for bankruptcy, they closed down more than 50 locations. Currently, the main plan is to close down around 600 locations, and these include its iconic Times Square location. This sad news regarding Red Lobster means many families who are used to having their shrimps and lobsters might have to look for other alternatives in the closed-down locations.
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KidKraft
Restaurants aren't the only companies filing for business bankruptcy in 2024. KidKraft, a toy company that has been in business for more than 50 years, is filing for Chapter 11 bankruptcy and said it would sell its U.S. and Canadian assets to Backyard Products. Massive dips in sales are one of the major contributors to this decision by the toy company.
However, the CEO of the company, Geoffrey Walker, said he is confident that the company will come back stronger under the ownership. “We are confident that with the strong support of new ownership, KidKraft will be on track to continue inspiring imaginative play experiences through our impressive range of high-quality products,” he said.
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Takeoff Technologies
Takeoff Technologies is another major company within the e-commerce sector, filing for bankruptcy in 2024. According to insider details, the company is still suffering from the effects of the Covid-19 pandemic.
More information from Bloomberg shows Takeoff Technologies operated 24 sites in the US but saw its revenue drop by about $13 million from 2022 to 2023. Furthermore, their financial data shows the operating loss widening to over $63 million in the same period.
Grocery Dive analysis pinpointed the recent challenges of the e-commerce sector as one of the contributors. “While grocery e-commerce — and demand for service providers to help streamline online order fulfillment — quickly rose during the pandemic, grocers have now pivoted their attention to retaining price-sensitive shoppers and grappling with the fading sales boosts they had received from the pandemic and inflation,” their report said.
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Joann
Joann is a fabrics and crafts store that filed for bankruptcy back in March 2024, although it has a different approach compared to Red Lobster. According to information regarding their bankruptcy filing, they are not expected to close their stores. It is among the biggest companies in the industry in the United States, with over 850 stores in 49 states. According to their report earnings, the company had $1 billion in debt, with shrinking revenues and a widening net loss.
As reported by NBC News, “The Company remains as focused as ever on providing customers with quality products and services that inspire their creativity,” Joann said.
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iSun
iSun is a provider of solar energy systems, and they are so prominent in the industry that some analysts are even concerned about the general welfare of the industry due to their bankruptcy.
iSun being in conversations for bankruptcy and insolvency is likely due to their massive increase in prices and rates. This made their customers seek other alternatives, leading to lower sales. As reported by Intellizence, iSun filed for Chapter 11 bankruptcy in June.
Conclusion
No company wants to be associated with bankruptcy, but it sometimes happens, and the company will have no option but to fix the situation.
Nevertheless, many companies which announced bankruptcies in 2024 came as a shock to many customers.
Red Lobster, Joann, iSun, and Takeoff Technologies are some of the major companies filing for bankruptcy in 2024. It is important to point out that some bankruptcies, such as Chapter 11, help restructure, create debt-payment plans, and stay in operation.