A consignment store in a northeastern state has closed its doors as of July, according to local business news. In Tennessee and elsewhere, retail shops continue to struggle financially. Chic 2 Chic closed its doors unexpectedly and has since filed for Chapter 7 bankruptcy protection. A creditor's meeting is scheduled for Sept. 12.
According to the limited information currently available, customers were made aware of the filing on the morning of Aug. 10. Customers received notification via email, but have not been told whether they can expect to be paid back any money owed to them. Customers entering the store prior to closing were informed the store was not giving cash out for funds owed.
Chapter 7 bankruptcy differs from Chapter 11 bankruptcy protection in several ways, notably in that the business immediately closes and ceases operations, rather than choosing (with court approval) to be protected from creditors during reorganization. In Chapter 7 bankruptcies like this one, a trustee will be appointed to oversee the liquidation of company assets. These assets are used to pay off existing debts, but if the debts outweigh the assets of the company, remaining debts are legally discharged.
While Chapter 7 bankruptcy might seem on its face like a stumbling block for a successful company, it is actually a useful financial tool for struggling businesses. By filing for bankruptcy, a Tennessee business like this one can remove the spectre of debt hanging over the company's branding and close the business in a timely and orderly fashion. This allows the proprietors of the establish to re-enter the market from a much stronger financial footing.
Source: thesunchronicle.com, "Foxboro consignment store files for bankruptcy protection", Rick Foster, Aug. 10, 2017