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, makes some changes, perhaps closes some underperforming locations, and continues operating.
In the second scenario, the retailer realizes that it will not be able to pay its invoices, so it goes into formal liquidation. Typically outsourced to a third party, a liquidation sale attempts to generate as much money as possible for creditors.
Related: Analyst: Beloved retailer heading into Chapter 11 bankruptcy
Generally, these sales last as long as the merchandise, and then the store will sell your accessories, computers, and anything else you may own. In many cases, after the retailer sells all of its products, it will auction off its intellectual property (IP). That may include your name, website, and anything else you may own.
It's rare for a retailer that has filed for Chapter 11 to simply close its doors abruptly. Doing so misses the opportunity to maximize returns to creditors.
However, that's exactly what happened on January 13 when Showfields' remaining retail stores closed for good.
Image source: Shutterstock
Showfields tried to change retail
Showfields, co-founded by Tal Zvi Nathanial, attempted to highlight products that were typically only sold online. Armed with $9 million in venture capitalThe retailer offered a rotating mix of products 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 selection of mission-driven products, art and events that can be found 'IRL' for the first time. We amplify the mission to creatively stimulate partners, artists and customers to create change and evoke new feelings,” the company wrote on its website.
After closing its Miami and Manhattan locations in the summer of 2023, the company still operated stores in Brooklyn, New York, Washington, D.C., and Los Angeles.
The abrupt closure of the chain leaves many of its suppliers in a difficult situation. Companies paid the chain for shelf space and sent it merchandise to sell.
Cowbell Plant founder Jeanna Liu, an unsecured creditor, shared the news of the bankruptcy on her X page (the old Twitter).
“I'm not optimistic that I will get my deposit back as an unsecured creditor, but I feel worse for other small brands that already have inventory with them,” he wrote.
Showfields shares limited information
Showfields' website makes no mention of the bankruptcy and appears to have not been updated since early December. It still shows events that have already happened and until the morning of January 14 it does not mention the closure.
In the memo, which Liu partially shared in his Tweet, the company cited the “difficult decision” to close and thanked its partners for trying to help the retailer through the bankruptcy process.
Retail Dive, which saw internal memos about the closure, provided more details.
“The company told suppliers that it had no updated information about its bankruptcy and informed them that they could make claims as creditors through court proceedings, for time they paid but will not receive. Showfields cannot pay back the supplier. shipping, the company also said in the memo,” according to Retail Diving.
When Showfields filed for Chapter 11 bankruptcy in October, the Los Angeles store was not included in the filing. However, that location has also been closed. In that presentation, the company blamed the Covid pandemic for its difficulties.
“As with most commercial enterprises established almost immediately before and during the Covid-19 pandemic, the debtor was affected by lower than expected revenue streams from non-debtor stores due to low sales from members such as “as a result of the national lockdown and the gradual reopening of public spaces throughout the country,” the company said in its bankruptcy filing.
Showfields did not respond to a request for comment sent by TheStreet via the contact form on its website.
