When a retail chain files for Chapter 11 bankruptcy it almost always follows one of two paths. In many cases, the company finds the money it needs to continue and it makes some changes, maybe closes some underperforming locations, and continues operating.
In the second scenario, the retailer realizes it won’t be able to pay its bills so it moves to a formal liquidation. Usually contracted out to a third party, a liquidation sale attempts to bring as much cash back for creditors as possible.
Generally, these sales last as long as the merchandise does, and then the store will sell its fixtures, computers, and anything else it might own, In many cases, after the retailer sells all its goods, it will auction off its intellectual property (IP). That can include its name, website, and anything else it might own.
It’s rare that a retailer which has filed Chapter 11 simply abruptly closes its doors. Doing that passes up the opportunity to maximize returns for any creditors.
That, however, is exactly what happened on Jan. 13 as the remaining Showfields retail stores closed for good.
Showfields highlighted digital native brands.
Image source: Shutterstock
Showfields tried to change retail
Showfields attempted to highlight products that were generally only sold online. The retailer offered a rotating mix of merchandise designed to live up to the chain’s description of itself as “the most interesting store in the world.”
“We are a lifestyle discovery store. We feature a curation of mission-driven products, art, and events that can be found ‘IRL’ for the first time. We amplify the mission of creatively stimulating partners, artists, and customers to create change and evoke new feelings,” the company wrote on its website.
After closing its Miami and Manhattan locations earlier this year, the company still operated stores in Brooklyn, New York; Washington, D.C. and Los Angeles
The chain’s abrupt closure leaves many of its vendors in a difficult spot. companies paid the chain for shelf space and sent it merchandise to sell.
Cowbell Plant founder Jeanna Liu, an unsecured creditor, shared the bankruptcy news on her X (the former Twitter) page.
“Not optimistic I’ll get my deposit back as an unsecured creditor, but I feel worse for other small brands who already have inventory with them,” she wrote.
Showfields shares limited info
The Showfields website does not mention the bankruptcy and it looks like it has not been updated since early December. It still shows events that have already passed and as of the morning of Jan. 14, does not mention the closure.
In the memo, which Liu partially shared in her Tweet, the company cited the “tough decision” to close and thanked its partners for trying to help the retailer get through the bankruptcy process.
Retail Dive, which saw internal memos on the closure provided more details.
“The company told vendors that it had no update on its bankruptcy and advised they may be able to file claims as creditors via court proceedings, for time they paid for but won’t receive. Showfields is unable to pay for return-to-vendor shipping, the company also said in the memo,” according to RetailDive.
When Showfields filed Chapter 11 bankruptcy in October, the Los Angeles store was not included in the filing. That location, however, has also been closed. In that filing, the company blamed the covid pandemic for its struggles.
“As with most commercial enterprises established almost immediately prior to and during the covid-19 pandemic, the debtor was plagued with lower-than-expected revenue streams from the non-debtor stores due to low member sales resulting from the national lockdown and gradual reopening of public spaces across the country,” the company said in the bankruptcy filing.
Showfields did not respond to a request for comment sent by TheStreet through contact form on its website.