Iconic retail food company closing down, no bankruptcy filing yet
According to The Street, Distressed businesses often find themselves at a crossroads when financial troubles arise. In many cases, companies file for Chapter 11 bankruptcy to reorganize their operations and restructure their financial obligations under court protection. This allows them to continue functioning while attempting to regain stability.
Chapter 7 Bankruptcy: The End of the Line
When all seems lost and a company cannot sustain its operations, the next step may be to file for Chapter 7 bankruptcy. This process involves liquidating the company’s assets and shutting down operations entirely, marking a definitive end to the business.
Liquidation Without Bankruptcy
In some instances, a company may choose to liquidate its products and wind down its operations without formally filing for bankruptcy. This route often involves closing down without the legal protections that bankruptcy provides.
Examples of Recent Retail Bankruptcy Cases
Several notable retailers have navigated these challenging waters recently. For instance, LL Flooring and Big Lots opted for Chapter 11 protection, closing several store locations while continuing their operations. This approach allows them to restructure their business and potentially emerge stronger.
Conversely, the discount retail chain 99 Cents Only filed for Chapter 11 bankruptcy in April, liquidating its inventory and closing all of its stores. This decision underscores the stark contrast in outcomes that various businesses may experience.
A Sudden Shutdown: Midwest Transport
In another case, the Midwest Transport, a trucking and logistics company based in Robinson, Ill., unexpectedly ceased its operations in September without filing for bankruptcy. The company, which had a contract with the U.S. Postal Service to haul mail, informed its employees of the decision via phone calls, leaving many puzzled about the abrupt shutdown.
Despite employing over 480 drivers and approximately 650 workers, the company has not issued any public statement regarding its decision and remains silent on whether it will seek bankruptcy protection. As of October 1, the company’s website was still operational, but its phone number was inactive.
The Closure of Yelloh
Finally, the iconic frozen foods delivery company Yelloh, formerly known as Schwan’s, announced it would cease all operations in November due to multiple insurmountable business challenges, including economic pressures and shifting consumer preferences. As of October 1, Yelloh has not filed for bankruptcy.
CEO Bernardo Santana expressed the company’s heavy hearts in a September 23 statement, acknowledging the dedication of both employees and customers throughout the years. He emphasized the honor of serving families their favorite meals and frozen treats.
Founded in 1952 as Schwan’s, the company once boasted the nation’s largest fleet of freezer trucks. However, over the last two decades, it has faced challenges from changing consumer lifestyles and increased competition. The COVID-19 pandemic further exacerbated staffing issues and caused significant food supply chain disruptions.
Yelloh’s board member Michael Ziebell reflected on the business’s legacy, noting that the transition to digital shopping has replaced the personal delivery interactions that once defined the company. Yelloh plans to wind down its operations over the next two months, having already issued notices to employees under the Worker Adjustment and Retraining Notification Act. The company’s final day of delivery is set for November 8.
