Lawyers expect tidal wave of bankruptcies due to COVID-19 pandemic

With Neiman Marcus and J-Crew filing for bankruptcy, attorneys say this is just the beginning, of a tidal wave of bankruptcy filings due to COVID-19.

After closing up for a month, many businesses are seeing a lot more red than green. For some, the deadly new virus has left their finances in critical condition, and owners are being forced to make some painful decisions.

"It’s time to say goodbye to Barrio Café Gran Reserva," said Silvana Salcido Esparza, the owner of the restaurant, in a tearful Facebook video.

The restaurant is a victim of the pandemic, and Esparza had to make the tough decision to shut one of her restaurants down, in order to save her other restaurants.  

Many business owners across the state are now analyzing their next move, whether it's to stop the bleeding, close shop, or file for bankruptcy.

"To determine if they have the customers coming back, long term revenue. Do they have the capital to get through the downturn?" said bankruptcy attorney Brad Stevens.

Stevens anticipates to see about three times the average number of businesses will seek bankruptcy protection.

"Maybe 25 or 30 Chapter 11s in a four-to-six-month time frame, versus, I think, 100s plus," said Stevens.

The next 30 days are going to be crucial for businesses, as they begin to slowly re-open. Stevens expects retailers, restaurants, and the airline industry are going to be some of the first businesses to file for Chapter 11 bankruptcy in the next 30 to 60 days, while many more, will end up closing their doors for good.

"Everyone is taking a wait-and-see attitude," said Stevens. "Can they work out arrangements with their creditors to avoid bankruptcy?"

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RELATED: Is it the flu, a cold or COVID-19? Different viruses present similar symptoms

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