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Silicon Valley vs. Retail: 2 Differing Views of Bankruptcy

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Silicon Valley vs. Retail: 2 Differing Views of Bankruptcy

Silicon Valley vs. Retail: 2 Differing Views of Bankruptcy

Today’s high tech companies and yesterday’s brick-and-mortar stores share one thing in common: bankruptcies. What they don’t share is the same outlook.

Bankruptcies have been gaining positive momentum in the tech world. Bankruptcies, once a Silicon Valley stigma, are now proving an acceptable alternative for tech companies.

The same can’t be said for retail. Three months into 2017, retail bankruptcies are trending alarmingly upward. It’s hard to think positive when some are calling retail the “new oil and gas.”

Tech Companies Embracing Bankruptcies

More and more tech companies are taking the bankruptcy path, and in doing so, some are finding salvation. For example:

  • Gawker, after going into bankruptcy, sold some of its assets to Univision for $135 million.
  • Karhoo, a ride-sharing service, went into bankruptcy and later obtained refinancing from Renault.
  • Nasty Gal, an online fashion retailer, followed bankruptcy with a $20 million asset purchase from Boohoo.com.

Bankruptcy was once unthinkable for tech startups. But that thinking has changed. Now bankruptcies are viewed as a chance for rescue. The change can be traced back to Kodak’s 2012 bankruptcy, in which Kodak sold a portfolio of patents for $525 million. From Kodak, Silicon Valley learned that even in bankruptcy, intellectual property has the potential for an enormous payoff.

Retail Bankruptcies Ramping Up

As tech companies find salvation in bankruptcy, the retail industry struggles with a string of recent bankruptcy filings. Since the beginning of 2017, The Limited, Wet Seal, Easte Mountain Sports and Bob’s Stores have all filed for bankruptcy.

And this may just be the beginning.

According to ClarkHoward.com, 2017 could see as many as 19 more retailers go bankrupt. This would eclipse 2016, a bleak year in which at least 14 major U.S. retailers closed 100 or more stores.

For 2017, here’s a look at some of the notable retailers facing bankruptcy:

  • Sears Holdings
  • Nine West Holdings
  • Rue21
  • Gymboree
  • David’s Bridal
  • TOMS Shoes
  • Charming Charlie
  • J Crew

Bankruptcy may sound like a negative, but it can be a positive, allowing you to escape from your harassing creditors. Don’t let bankruptcy’s stigma stop you from doing what’s in your best interests. Discuss your finances with a knowledgeable bankruptcy attorney, and we can help.

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