A fluctuating market and strong competitors can really take a toll on a company, no matter its size. Hancock Fabrics Inc., one of the biggest fabric sellers in the country knows a thing or two about that. It recently filed for Chapter 11 bankruptcy for the second time in under a decade. Although the company came out stronger the first time around, competition and higher costs related to pensions and retirement plans have led to declining numbers.
According to the petition, the company has $151.4 million in assets and $182 million in debt. The company, which has stores in 37 states, wants to use the bankruptcy process in order to potentially find a buyer, to close various stores immediately, and to grow its online presence.
The company hopes the court system will allow it to take out a loan of up to $100 million to help stabilize the company. Under bankruptcy protection, the store plans to quickly close 70 stores with the help of a liquidator. During the reorganization process, the company plans to continue its operations.
Hancock Fabrics Inc. was founded in 1957 and currently has more than 250 stores. It has strong competitors such as Michael's, Wal-Mart and online retailers.
While this company's situation may seem gloomy, it appears Hancock is using the protections provided through bankruptcy as a way toward a positive future. It is undoubtedly difficult to make the choice to file for Chapter 11 bankruptcy, but many business owners understand that it may be the best way for them to reorganize their business so that it can eventually grow.