The year 2024 witnessed a severe economic downturn, culminating in the filing for bankruptcy of a plethora of top-notch companies. Here's a sneak peek at some of the prominent ones.
1. Spirit Airlines
Spirit Airlines, the largest US budget carrier filed a Chapter 11 bankruptcy (a legal process that allows a business to reorganise its debts and assets while remaining in operation) petition in November this year after facing mounting losses and insurmountable debt in the post-pandemic travel landscape. The airline lost over $2.5 billion since 2020 and faces impending debt payments of over $1 billion in 2025-2026.
2. Red Lobster
The world’s largest seafood chain, Red Lobster, filed for bankruptcy in May, counting over $1 billion in debt and less than $30 million in cash reserves. In the bankruptcy documents, CEO Jonathan Tibus said debtors faced numerous financial and operational ultimatums, including a challenging macroeconomic atmosphere, a bloated and underperforming restaurant footprint, failed or ill-advised strategic initiatives and steep competition in the sector.
3. SunPower
SunPower, a national solar panel installer, filed for bankruptcy in August. As part of it, Complete Solaria, an amalgamation of Complete Solar and Solaria, will purchase SunPower's Blue Raven Solar and New Homes subsidiaries and parts of its dealer network.
4. LaVie Care Centres
A prominent name in skilled nursing facilities in the United States, LaVie Care Centers filed for bankruptcy in June. The Atlanta-based firm blames the pandemic's lingering effects and excessive labour costs for its financial difficulties. The company has over $1.1 billion in outstanding debt including $622 million tied to long-term lease agreements.
5. The Body Shop (US & Canada)
A leading UK-based cosmetics brand, the Body Shop, filed for Chapter 7 insolvency (a legal process that allows individuals and businesses to discharge most of their debts by liquidating their non-exempt assets) in the US and Canada in March. The company winded up its US stores on March 1 and liquidated 33 of 105 stores in Canada along with discontinuing online sales in the country. Founded in 1976 by Anita Roddick and known for its ethics, the Body Shop has been hit by inflation and competition as mall-based, middle-class-focused retailers find it difficult to stay afloat.
6. Tupperware
Top kitchenware and home storage brand Tupperware filed for bankruptcy in September. Founded in 1946 with Earl Tupper's airtight plastic containers, it has listed assets between $500 million and $1 billion and liabilities ranging from $1 billion to $10 billion. CEO Laurie Ann Goldman cited the bankruptcy as "years of financial struggles exacerbated by a tough macroeconomic environment". Presently, the company seeks court approval to shield its brand and transition into a digital-first and tech-driven model.
7. BYJU'S Alpha
Indian edtech giant BYJU'S sought bankruptcy protection in the US in February over a default on a $1.2 billion loan. CEO Timothy Pohl disclosed in court documents that the firm lacks the financial resources to sustain its legal battle with the parent company.
8. Northvolt
Northvolt has been looking for bankruptcy protection in the wake of financial challenges. The Swedish battery manufacturer filed for Chapter 11 bankruptcy protection in the US in November. The company, critical to the booming electric vehicle sector, is concerned by $5.8-billion debt amid production issues, loss of a key customer and inadequate funding.
9. Avon
Anglo-American multinational cosmetics, skincare, perfume, and personal care manufacturer Avon headed to bankruptcy owing to a barrage of lawsuits in August. The US-based company faces over 200 lawsuits linking its talc-based products to cancer. Despite ceasing sales in the US in 2016, Avon continues to operate in international markets including Europe and Latin America.
10. rue21
A leading fashion retailer, rue21, declared itself bankrupt following intense competition from internet merchants. The company reflects wider obstacles in the retail industry and announced plans to shut down across locations.
The spiralling inflation has compelled consumers to cut down on discretionary spending resulting in the surprising bankruptcy filings by reputed brands whereas other brands fell victim to changing trends or even more malicious ailments like cyberattacks.
According to Challenger, Gray & Christmas, an outplacement services firm, over 19 companies have benched a combined 14,000 employees owing to bankruptcy.
