In Bankruptcy Information, Bankruptcy News

Women’s clothing store Dressbarn is among the latest brick and mortar retailers to throw in the towel. Dressbarn’s parent company, Ascena Retail Group, which also owns Lane Bryant, Anne Taylor and Loft, announced on Monday that it is closing all 650 locations due to slow sales. Dressbarn has been in existence and a staple at shopping malls across the United States for a half century. According to an article in The New York Times, Dressbarn’s closures will be orderly and will not affect Ascena’s other stores.

Dressbarn is not filing bankruptcy. It is not attempting to reorganize, as many other retailers have done, nor is it liquidating, like Schubach Jewelers, which we have written about before, is doing. Instead, Dressbarn is simply winding up its business, selling what inventory it has, and then will quietly close. According to the news release from Dressbarn, it will continue operations during this time, and there will be no changes to the current return, refund, or gift card policies or loyalty reward programs. However, it should be obvious to all consumers that gift cards and loyalty programs will be worthless once Dressbarn closes its doors.

The reason that Dressbarn is able to liquidate in this fashion is that its parent company, Ascena Retail Group, remains healthy and can absorb the loss. Other retailers don’t have this luxury. A single retailer would not be able to wind down, and a retailer in a group that is itself troubled, such as Samuel’s Jewelers, would likewise not have the resources to remain open for an orderly liquidation. These kinds of retailers would most likely be forced into Chapter 7 and their liquidation would take place under the guidance of a court-appointed trustee.

With the Dressbarn closings, more than 7,000 stores have closed so far in 2019.

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