Holiday Sales Drop to Force Bankruptcies, Closings
From Bloomberg news online:
“U.S. retailers face a wave of store closings, bankruptcies and takeovers starting next month as holiday sales are shaping up to be the worst in 40 years.
Retailers may close 73,000 stores in the first half of 2009, according to the International Council of Shopping Centers. Talbots Inc. and Sears Holding Corp. are among chains shuttering underperforming locations.
More than a dozen retailers, including Circuit City Stores Inc., Linens ‘n Things Inc., Sharper Image Corp. and Steve & Barry’s LLC, have sought bankruptcy protection this year as the credit squeeze and recession drained sales. Investors will start seeing a wide variety of chains seeking bankruptcy protection in February when they file financial reports, said Burt Flickinger.”
As previously posted on this blog, Orange County has been affected by the filing of bankruptcies and closings of stores like Circuit City and Linens ‘n Things. From Costa Mesa to Irvine to Lake Forest, store closings have left little of Orange County untouched. So far only bankruptcy lawyers seem to have benefited. But Flickinger says that retail bankruptcies may be good for the industry in the long run:
“We’ll be going from a Dickens-esque worst of times this December to the best of times in future Decembers because we’ll rationalize out all the redundant retailers and retail space in shopping centers,” Flickinger said.
We shall see…
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California Cities Included in Bankruptcy Prediction For 2009
Four cities in California and six other cities nationwide will be seeking for bankruptcy lawyers soon, according to a prediction by John Moorlach.
Moorlach, the accountant who predicted Orange County’s bankruptcy in 1994, said as many as 10 cities will look for court protection from creditors next year under Chapter 9 of the bankruptcy code, as public finances get worse.
Although he estimated these numbers based on general economic conditions, Moorlach, now chairman of the Orange County Board of Supervisors, didn’t mention the California cities that may file for bankruptcy. Will Irvine be one of those municipalities? Is Santa Ana next? Let’s hope that this time around, Orange County cities escape the pain of bankruptcy, so that we can all have a happy new year!
Orange County Based Oil Change Company Files Bankruptcy
The bankruptcy attorneys for Orange County’s EZ Lube have filed for Chapter 11 bankruptcy on its behalf.
From the Orange County Register online:
“Santa Ana-based EZ Lube — a chain of 82 largely SoCal oil-change shops — says it has filed for bankruptcy protection and has plans to sell its assets. The company says the financial dealings should have no impact on its stores or customers.
EZ Lube’s court papers blamed its financial woes on rising gas prices that cut driving and need for oil changes, high debt levels and negative publicity from a state and Orange County probe into EZ Lube’s sales procedures.
According to bankruptcy court papers, EZ Lube — which employs 1,000 people — lost $44 million in 2007 and was down another $8 milion in 2008’s first nine months. Sales were off 10% to $66 million in 2008’s first 10 months.
EZ Lube, which entered bankruptcy Dec. 9, may auction its assets off in March. It already has a big by a group that includes its current lenders.
Says CEO Marc Graham in a statement on EZ Lube’s Web page: ‘Completing the sale through the Chapter 11 process will allow us to significantly reduce our debt and undertake an orderly transition of ownership. Throughout the sale process, servicing our customers and providing valuable preventative maintenance services is our priority.’”
It is unclear if any of the EZ Lube’s in Orange County will be closed, or if they will all remain open during the reorganization process. EZ Lube has many locations in Orange County, including: Costa Mesa, Laguna Woods, Tustin, Orange, Mission Viejo, Laguna Hills, Lake Forest, Huntington Beach, Dana Point, Fullerton, San Clemente, and Yorba Linda.
To find the nearest EZ Lube near you, click here
Polaroid Files for Chapter 11 Bankruptcy — Again
Orange County residents learned earlier this year of Circuit City’s bankruptcy and store closings; now it appears that the stores that remain open may have one less brand of merchandise to sell — Polaroid. Back in February, Polaroid stopped producing it’s signature instant film cameras, and switched gears to focus on LCD TV’s, digital cameras, and other such electronics products. Now, the bankruptcy attorneys for Polaroid have begun the Chapter 11 bankruptcy process because Polaroid’s parent company, Petters Group Worldwide, is embroiled in a fraud investigation. Polaroid said that the bankruptcy reorganization will not impact day-to-day operations, and that Polaroid will likely be sold at the end of the process.
So fear not, Orange County. It seems that, for the time being at least, you can still shop for Polaroid products this holiday season, whether at the Irvine Spectrum, Fashion Island in Newport Beach, South Coast Plaza in Costa Mesa, the Mission Viejo Mall, or at any of the many other Orange County shopping centers.
Polaroid filed for Chapter 11 bankruptcy previously in 2001.
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Lake Forest Based Computer Company To Cut 2,500 jobs
From the Orange County Register yesterday:
“Western Digital Inc., the Lake Forest-based hard-drive maker, announced today that it will cut 2,500 jobs worldwide, about 5 percent of its workforce.
The company also said it would shut down most of its manufacturing operations during Dec. 20-Jan. 1 to bring its inventories into line with what it called anticipated short-term demand.
In addition, the company will cut manufacturing work hours about 20 percent by using fewer temporary workers, reducing shift overtime and through employee attrition.
The impact on Orange County jobs was not immediately known.”
As a hub of business, Orange County can expect news releases like this to be the norm for some time to come. Although Lake Forest is home to this and many other at risk companies, there are even more such businesses located in the Orange County cities of Irvine and Newport Beach. Once the job cuts begin, it is not long before these businesses hire an attorney to file for bankruptcy on their behalf. For larger companies like Western Digital, a bankruptcy would likely be a reorganization under Chapter 11, but for other, smaller businesses, Chapter 7 bankruptcy is often the most likely route.
For More Information: click here
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