Retailers and their lenders may be holding off for now because of the inability to hold liquidation sales (whether a fraction of stores or an entire fleet in a business wind down), Retail Dive reported. Nonetheless, the pandemic has been a cataclysm for the market, bringing foot traffic and store sales to a halt for retailers that don't sell essential items and forcing retailers to scramble for cash. Now, protracted closures are eating into retailers' liquidity cushions and loan availability. And few, if any, observers expect retail trends to return to their pre-pandemic normal after stores re-open, for those that do indeed re-open. "I think we're now going to see a historic number of retail, restaurant, hospitality and experiential related concepts filing for bankruptcy," said Craig Solomon Ganz, a partner with law firm Ballard Spahr. March and April have brought a steady march of credit downgrades to the retail sector based on conditions created by the COVID-19 pandemic and the efforts to slow it. In early April, Fitch downgraded nine retailers in a single day, including some with relatively healthy balance sheets. Others have been downgraded into or deeper into junk territory by Fitch and S&P as already precarious sales and liquidity trends have been rocked by the current environment. Modell's, which filed in early March, has put its chapter 11 case on ice for now. Pier 1 suspended a bankruptcy auction for its assets and was granted permission to stop paying rent and vendors as it closes its store fleet. Plans for both retailers to permanently close stores are on hold for the simple reason that retailers can't hold going-out-of-business sales if their stores are closed or consumers can't or won't leave their homes.
