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The impact of COVID-19 on efforts of businesses to reorganize or even orderly liquidate in bankruptcy has been swift and devastating, particularly in the retail sector. Who could have ever thought that the economy would be so shut down that restructuring efforts under the Bankruptcy Code would be impossible? In the financial apocalypse of 2008, the notion was that certain financial institutions were too big to fail. With the COVID-19 pandemic, “too shut down to shut down” may be the mantra to describe efforts under the Bankruptcy Code.
Whether it is orderly liquidation or reorganization, COVID-19 is serving as a massive impediment to bankruptcy relief. With uncertainty as to when the pandemic will ease, Bankruptcy Courts do not seem to be a panacea leading to successful reorganizations or orderly liquidations for troubled companies.
