We’re in a time of multiple bankruptcies being declared by venerable retail brands. Jason DeJonker, attorney with the law firm of Bryan Cave Leighton Paisner LLP, discusses their options in the face of ultimate failure.

Recent bad news for retailers has come in the form of the bankruptcy filing by Century 21, as well as LVMH backing away from its $16 billion acquisition of Tiffany’s. DeJonker says those events signal a “significant acceleration of the downtrend we’ve seen for months.” The tailspin has been exacerbated by the coronavirus pandemic, but many major retailers were in trouble long before that.

For troubled retail chains, bankruptcy seems the only option when their efforts at survival are thwarted by landlords and lenders. “They’ve got to preserve cash,” says DeJonker, “and make decisions that benefit all of their creditors. The bankruptcy process is a way for them to do so.”

Without the pandemic dragging down consumer buying, they might have had options for surviving. Now, the crisis is especially acute for businesses with an extensive presence in major urban locations, especially malls. As anchor stores go out of business, landlords find it impossible to cut deals with smaller tenants.

Not every struggling retailer faces a future that dire, however. Some might be able to rescue their businesses, even if it means eventually emerging from the mess with fewer stores or products, or shifting the bulk of their sales to online. The most important step for any company trying to withstand the storm, says DeJonker, is to communicate with all parties involved — investors, shareholders, lenders, vendors, management and boards. With the right approach, they might be open to letting the business continue, if that means receiving more of a payback than liquidation would have provided.