A Perfect Storm: Retailers in Bankruptcy in the Post-BAPCPA Economic Downturn, Part I

In the approximately five years since the Bankruptcy Abuse Prevention and Consumer Protection Act's ("BAPCPA") amendments to the Bankruptcy Code took effect, one general consensus has emerged: the effects of BAPCPA on distressed retailers have been profound. The combination of a truncated timeline for dealing with leases, a limited ability to extend plan exclusivity, and expanded rights of vendors to assert administrative priority claims all work together to create a rushed process with very little room for error. Independent of BAPCPA's changes, the trend of some courts to question "critical vendor" orders and increased bankruptcy court deference to state laws in the conduct of "Going Out of Business" ("GOB") sales, further constrict the ability of retailers to keep their operations running or to realize value when they have to close a location or liquidate entirely. Read more