What to Learn From Recent Retail Chapter 11 Filings

Many distressed retailers turn to Chapter 11 to restructure and survive. Recent filings by retailers illustrate how companies can cut debt, streamline operations and concentrate on their most profitable business lines, thereby re-emerging as leaner, more competitive businesses. 

In the first quarter of 2026, business bankruptcies were at their second-highest level since 2010. Small businesses filings were up 67 percent, compared to the first quarter of last year.

Many of these businesses are not closing their doors, however. For example, Saks Global, which owns luxury brands Saks Fifth Avenue, Neiman Marcus and Bergdorf Goodman, just emerged from Chapter 11 bankruptcy with a new name (Exemplar Luxury Group), a reduction of almost 75 percent of its debt and some $500 million in new financing. 

It is not just luxury retailers that are making optimal use of Chapter 11. QVC Group, which owns the QVC Network and the Home Shopping Network (HSN), has also filed for protection as it works to restructure its balance sheet and business operations.

Chapter 11 allows distressed retailers a multitude of options, which include:

• Using Bankruptcy Code Section 363 to quickly sell assets free of liens and other encumbrances at fair market value in order to generate cash and preserve value.
• Renegotiating vendor and supplier relationships, reset payment terms and maintain critical inventory sources during the restructuring process.
• Closing unprofitable locations and rejecting leases or assigning them to third parties. 

Retailers that address underperforming locations early in the process may be better positioned to focus on stores and markets that show promise for future growth. For example, H&M Group, a fast-fashion retailer, closed 128 stores as of May 31, 2026, reducing its store count by 3 percent to 4,038 locations worldwide. At the same time, other stores are being upgraded or opened in locations considered to have greater potential.

Recent cases also demonstrate the importance of moving quickly to secure debtor-in-possession (DIP) financing, which can provide the cash necessary to continue paying employees, purchasing inventory and meeting other operational expenses during restructuring.

In recent years, retailing has changed exponentially due to online commerce and to the effects of tariffs on foreign goods. For retailers that want to stay in the game, Chapter 11 bankruptcy can provide the necessary tools to restructure debt, reset key business relationships and emerge not just as relevant but also as a leading name among its core consumer base.

The Law Offices of Michael Jay Berger in Beverly Hills helps retailers and other businesses throughout Southern California successfully navigate Chapter 11 bankruptcy. To schedule a free initial consultation call 310-271-6223 or contact us online.