By Ramishah Maruf | CNN
It’s been a rough year for some household-name US retailers and businesses. As the economy emerged out of the Covid-19 pandemic, companies faced a laundry list of problems arising from high costs, supply shortages and growing competition.
As a result, several big names filed for bankruptcy in 2023.
A bankruptcy doesn’t necessarily mean a business is going bust, of course. Many businesses in the US file for bankruptcy to wind down some operations, shed debt and save on costs. A common route is Chapter 11 bankruptcy, which allows the company to solve its financial problems through reorganization.
WeWork
WeWork had a wild ride in 2023. Once the nation’s most valuable start-up, the company seemed poised to remake the nature of work in America. Some compare its meteoric rise and chaotic, high-profile fall to the Fyre Festival and FTX fiascos.
The beleaguered coworking-space company filed for Chapter 11 bankruptcy in November. It was not much of a surprise. The month prior, WeWork had said it was struggling to pay back its debt after the pandemic rocked its core business as more people worked from home.
The former tech unicorn began coming undone long before Covid-19, however. A botched IPO attempt in 2019 unraveled the business, revealing larger-than-expected losses and potential conflicts of interest with the company’s cofounder and then-CEO Adam Neumann. Neumann’s unorthodox leadership style was the subject of lots of news coverage (along with a Hulu documentary), and he was ousted in 2019.
WeWork said it will remain open and operational as it renegotiates its leases and debt obligations.
Rite Aid
After a long chain of problems for drug stores, Rite Aid filed for Chapter 11 bankruptcy in October.
Also see: 31 stores in California on Rite Aid closure list
Like CVS and Walgreens, Rite Aid had to settle expensive lawsuits stemming from accusations of filing unlawful opioid prescriptions for customers. But, unlike its rivals, Rite Aid was losing its battle against the mounting debt and was not able to recover financially.
Rite Aid was also struggling to compete against Amazon, Walmart, Target and Costco, more customer-friendly alternatives to nationwide pharmacy chains.
In an October SEC filing, the company said it expected significant increases in losses — on top of the three-quarters of a billion dollars it lost between March 2022 and March 2023 — and another $307 million between March and May this year.
The company said in a statement it had secured $3.5 billion in financing and debt reduction agreements from lenders to keep the company afloat through its bankruptcy. It said it would accelerate the pace of its store closures and sell off some of its businesses, including prescription benefit provider Elixir Solutions; and also appointed a new CEO.
Rite Aid specifically cited increasing theft in the closure of some of its stores.
Bed Bath & Beyond
In a long journey that had a final demise this year, the everything-store filed for bankruptcy in April. It closed its final 360 stores and also 120 buybuy BABYs in one of the largest retail bankruptcies in years.
But you’ll still see the famous blue logo. Overstock.com bought the brand out of bankruptcy and relaunched its own site as BedBathandBeyond.com. The move merged Overstock’s online business model and merchandise categories with popular branded products favored by Bed Bath & Beyond shoppers.
Also see: The $11.8 billion mistake that led to Bed, Bath & Beyond’s demise
Bed Bath & Beyond’s iconic 20%-off a single item “Big Blue” coupon was resurrected, but can only be used online.
The company had long been shrinking to save money. Earlier in 2023, it said it would close around 400 locations, but would keep open profitable stores in key markets. It also tried to save money by not paying severance to some laid-off workers at closing stores.
Tuesday Morning
Another home goods store that went bust in 2023 was Tuesday Morning, which filed for Chapter 11 bankruptcy in February because of its “exceedingly burdensome debt.” It was its second bankruptcy in three years.
Also see: Tuesday Morning closing its Southern California stores
In May, the company announced it was going out of business and closing all of its 200 stores.
Its first bankruptcy happened in May 2020, during the peak of the pandemic because of prolonged store closures that caused an “insurmountable financial hurdle.” It previously had 700 locations three years ago.
Party City
The party looked like it was over for the party supply store when it filed for bankruptcy in January 2023, weighed down by competition and years of financial losses. In a regulatory filing it said it reached an agreement with debtholders to cut its $1.7 billion debt load.
America’s largest party supplier filed for bankruptcy in 2023, hurt by big-box retailer competition, rising costs during the pandemic — and a helium shortage.
However, in September, it exited bankruptcy after a US judge signed off on the retailer’s reorganization plans.
The plan cancels nearly $1 billion of Party City’s debt, and while some of Party City’s nearly 800 US stores will close due to the bankruptcy agreement, the majority will stay open, according to the company.
SmileDirectClub
The telehealth orthodontics company shut down in December, less than three months after filing for Chapter 11 bankruptcy.
The company sold teeth aligners, with the typical course taking 4-6 months. The company encouraged customers who were stranded in the middle of their treatment to consult local dental offices.
SmileDirectClub, founded in 2014, had once heralded itself as an affordable alternative to traditional orthodontics with a mission “to democratize access to a smile each and every person loves by making it affordable and convenient for everyone.”
In a statement, the company said the restructuring would “allow SmileDirectClub to thrive as an international oral care leader for many years to come” and emphasizing its intention “to continue to provide affordable and accessible oral care to its customers without disruption.”
Lordstown Motors
The electric vehicle maker filed for Chapter 11 bankruptcy protection in June and put itself up for sale.
It also announced a lawsuit against Foxconn, accusing its biggest shareholder and former partner of setting out to “destroy” its business.
In a statement, the company said it was left with no choice after a high-profile tie-up with Foxconn, one of the world’s biggest electronics manufacturers, fell apart. It accused Foxconn of fraud and failing to follow through on promises to invest in the company.
Lordstown, taking its name from its industrial Ohio base, was the lifeblood for the local economy — it bought its factory from GM in 2019 to produce small cars for America’s top automaker. At first employing 1,600, by the end of 2022 it only had 260 full-time employees. In 2021, just a few years after launching, it warned that it could go out of business.
– CNN’s Catherine Thorbecke, Eva Rothenberg, David Goldman, Nathaniel Meyersohn, Jordan Valinsky, Samantha Delouya and Michelle Toh contributed to this report.
