According to an article in the Star-Telegram, clothing retailer Eddie Bauer filed Chapter 11 bankruptcy today. Eddie Bauer is the most recent casualty in a line of retailer bankruptcy filings caused by the recession. Circuit City , Linens ‘N Things, Mervyns and other retail chains have all filed bankruptcy because of falling sales during this recession.
The article said:
The company said in its filing that it is seeking court protection because its financial position was creating uncertainty among vendors that supply its inventory and because its cash flow problems “could severely impede” its operations.
Many retailers are facing similar stress as vendors refuse to provide inventory on credit or severely restrict a company’s access to vendor credit. Currently experts fear that many other retailers will face the same pressure from cautious vendors, pushing more retailers into bankruptcy.
The article continued:
Eddie Bauer considered refinancing of all or some of its debt, and it considered a reorganization, sale or liquidation through Chapter 11 bankruptcy protection, as well as continued operation on a modified business plan. It now hopes to be sold.
If Eddie Bauer liquidates in bankruptcy, we will experience more job losses that won’t be replace anytime soon. As the bankruptcy filings increase workers are getting battered from all sides. The retail industry employs hundreds of thousands of U.S. workers, therefore large scale job losses could send the unemployment rate higher than expected.