Thousands Of American Enterprises Apply For Bankruptcy Protection. How Should Chinese Export Enterprises Deal With It?

Affected by the new crown epidemic, many well-known clothing retailers and brand manufacturers in the United States, such as JC Penney, J. crew, ascenda retail group, Lucky Brand, Brooks brothers and other well-known clothing retailers and brands have applied for bankruptcy protection, which has brought huge risks to Chinese export enterprises. Recently, a new group of well-known clothing brands have fallen down.

On July 8, Brooks brothers, a 200 year old American men's wear brand, filed for bankruptcy protection. According to the bankruptcy filing, Brooks brothers closed 20% of its 250 U.S. stores. As the first clothing brand to introduce ready-made suits to American customers, Brooks brothers survived the two world wars and the great depression. It provided suits for 41 American presidents and participated in making military uniforms.

In August, Taylor, the oldest department store in the United States, filed for bankruptcy due to a series of local luxury stores. Due to the impact of the new crown pneumonia epidemic, the company was forced to temporarily close all 38 stores in the United States. Lord & Taylor, founded in 1826, was acquired by Le Tote, a fashion start-up, which filed for bankruptcy protection last year.

On the same day, men's wearhouse, a famous American men's wear brand, and tailored brands, the parent company of Jos. A. banks, filed for bankruptcy protection. The company has previously said it plans to gradually close up to 500 stores and expects to cut its staff by 20%.

According to the latest statistics, the number of enterprises seeking Chapter 11 protection increased by 52% in July compared with the same period last year. In July, 642 enterprises applied for bankruptcy protection. In the first seven months of this year, the number of cases applying for Chapter 11 of the bankruptcy law increased by 30% over the same period last year to about 4200.

Why do so many Americans seek Chapter 11 protection? What's the secret?

It turns out that the provisions of Chapter 11 of the bankruptcy law of the United States provide a chance for debt enterprises to restructure and postpone the repayment of their debts, thus increasing the possibility of their revival. Under the current situation of tight debt, bankruptcy and so on, enterprises can not survive the severe situation of cash flow, which can help enterprises to survive the current situation.

According to the provisions of Chapter 11, bankruptcy protection is divided into three steps: first, application for bankruptcy protection, reorganization and completion of bankruptcy protection or conversion to bankruptcy liquidation. 2、 To start Chapter 11 bankruptcy protection, the company needs to file an application with the federal bankruptcy court and then file a reorganization. After bankruptcy, the creditors concerned can not be temporarily protected by the corporate debt. 3、 During the period of freezing debts and lawsuits, the business of the enterprise can be carried out as usual. However, we should try our best to finance or restructure, negotiate with creditors, and strive to make the enterprise finally recover its vitality and finally be able to continue to pay its debts. Otherwise, it will be necessary to carry out bankruptcy liquidation.

In the process of self-help in bankruptcy of these enterprises, due to the characteristics of Chapter 11 of the American bankruptcy code, it is often the first choice for companies to seek survival from the desperate situation. Chapter 11 is an important source of garment industry, such as fabric, zipper, etc.

Some experts suggest that with the expansion of export scale, export enterprises have gradually become important stakeholders in bankruptcy protection cases filed by American companies. Faced with the situation that a large number of American enterprises have gone bankrupt, Chinese export enterprises should take the initiative to understand the basic situation of the U.S. bankruptcy law, as well as the measures needed after the bankruptcy of American enterprises, and actively take precautions in advance.