Chapter 11 Watch: Bankruptcies Reach Hyperspeed, Staples Mulls Post-Brexit Plans

Remember Martin Shkreli? Probably not. Remember the Pharma Bro? Ah, of course.

While Shkreli still sits free on bail awaiting what looks to be a short trial for his alleged price-gouging practices while helming Turing Pharmaceuticals, another of Shkreli’s pharma companies — KaloBios — announced on Friday (July 1) that it had officially emerged from Chapter 11 bankruptcy proceedings originally begun as a result of the Pharma Bro’s arrest. KaloBios wasn’t afraid to stick it to Shkreli either, claiming that the company has “risen from the ashes … to move forward as a successful, positive leader in our industry.”

Oh, and just to twist the knife, new shares diluted Shkreli’s former 47 percent stake in the company to 14 percent.

It just goes to prove that, even in the near-constant gloom of the Chapter 11 Watch, the good guys can still pull out a win every now and then.

Bankruptcies

For every Pharma Bro that gets his comeuppance, though, there are dozens of well-meaning retailers that slide into bankruptcy despite their best efforts. That’s what Alabama-based Simply Fashion Stores decided last year when it filed Chapter 11 documents in April, and it might be a sign of the times that, though the merchant operated 250 stores in several states, it managed to breeze through bankruptcy proceedings and secure a judge’s approval for liquidation in the space of just about 14 months.

“Liquidation sales and turning off the lights at each of the stores took at most two-and-a-half months,” Christopher Jarvinen, debtor counsel for Simply Fashion, told Daily Business Review. “That is phenomenal for a store chain of this size.”

As per terms of the hastily approved liquidation plan, Simply Fashion will be on the hook for all secured claims and between 1 and 2 percent of the $15 million in unsecured claims on its assets. It might not be the plan creditors hoped for, but the shaky brick-and-mortar retail market seems to suggest that they should gladly take a dollar today instead of two tomorrow.

Store Closures

Ron Burgundy wasn’t talking about the Brexit when he lamented, “Boy, that escalated quickly. I mean that really got out of hand.” But now that prime ministers, opposition leaders and dozens of other public figures are ducking for cover from public scrutiny, it appears as if Brexit fallout is just ramping up in the retail sector.

According to The Telegraph, Staples‘ still-uncertain future following its failed merger with Office Depot is causing some executives to wonder whether the equally volatile situation in the post-EU U.K. is worth the retailer’s time. Staples is said to be looking at cutting around $300 million from its annual costs, and the 200 stores it runs on the British Isles appear to be first in line for the chopping block. Staples has already retained KPMG for consultations on whether its U.K. business should be sold, restructured or allowed to slip into bankruptcy — all under the corporate-speak of “exploring strategic alternatives for [Staples’] European operations.”

Whatever the result, it doesn’t appear as if Staples’ U.K. brick-and-mortar footprint is long for the retail world.

Layoffs

Sometimes, political shifts can bring down a retailer. Other times, it’s merchants own actions that sink their once-seaworthy ships. However, in the case of Tekserve, Manhattan’s three-decades-old center for consumer electronics repairs that predates any Apple Genius Bar, time simply caught up with it.

In an interview with The New York Times, Tekserve CEO Jerry Gepner disclosed that the company will be shuttering its West 23rd Street store after 29 years in business. As a result, 70 employees will be put out on the street. However, Gepner acknowledged that Tekserve’s business model just doesn’t apply in a world where big-box tech retailers, like Apple and Best Buy, offer similar services over a much wider physical network and often as add-ons for buying electronics from them in the first place.

“This is a cultural shift,” Gepner told NYT. “It’s not a failure of the business. It’s like this giant wave finally crashed down upon us.”

Gepner joined Tekserve in 2014 with the mission of exploring the options of a turnaround, but he acknowledged to the owners of the business that it was unlikely even back then. Between a sea change in consumer behaviors around electronics since the 1980s and New York’s well-documented problem with rent increases as high as its Midtown skyline, Gepner and Tekserve had to come to the unfortunate realization that “there comes a point where [the business] doesn’t make sense anymore, as much as we love it.”