As the COVID-19 pandemic continues to create significant challenges for retail, another company has filed for bankruptcy.
On Tuesday, New England-based The Paper Store filed for Chapter 11 protection in U.S. Bankruptcy Court for Massachusetts. The retailer — which sells apparel and footwear in addition to stationery, home goods and other gifts — said that the coronavirus crisis had precipitated its petition.
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“In short, the filing of these Chapter 11 cases has been caused by the COVID-19 crisis,” chief restructuring officer Don Van der Wiel wrote in court documents.
In its filing, The Paper Store said it had been projected to generate “significant value” for 2020 before the pandemic struck, after having “nimbly overcom[e] operational challenges.” However, weeks of government-mandated store closures had left the company with little cash on hand — leaving it unable to purchase inventory ahead of the busy holiday season, the firm indicated. In order to get the capital needed to buy inventory, The Paper Store is hoping to secure a sale by late August; it is not planning to liquidate.
Founded 55 years ago, The Paper Store had expanded to 86 stores with a workforce of about 2,000 people. The company, which furloughed the majority of its employees during the pandemic, employed about 393 workers full-time and 554 on a part-time basis across all stores as of Tuesday.
“It is the hope and goal of the debtors, through the consummation of the anticipated going concern sale, to reemploy all of the approximately 2,000 employees who previously worked for The Paper Store,” the company wrote in its filing.
As the pandemic forced store closures and squeezed discretionary spending, retailers across the board have been challenged. The public health crisis caused many to tap existing credit lines, furlough and/or lay off workers and reduce executive pay in a bid to cut costs. What’s more, a growing list of traditional retailers — including boldface names such as JCPenney, J.Crew and Neiman Marcus — have filed for Chapter 11 protection since May. Just this week, apparel and accessories retailer RTW Retailwinds Inc., parent to New York & Co., pulled the trigger on a bankruptcy filing, revealing it could close all 387 brick-and-mortar stores. A number of fashion retailers remain on bankruptcy watch, among them Men’s Warehouse parent Tailored Brands and Ann Taylor owner Ascena as well as women’s clothing boutique Francesca’s.