Muji USA Ltd., the U.S. division of the iconic Japanese home and goods fashion retailer, filed for Chapter 11 bankruptcy on July 10, 2020 in the United States Bankruptcy Court for the District of Delaware, with plans to reposition the brand’s e-commerce division.
Chapter 11 bankruptcy filings permit a struggling businesses to continue its operations and improve their financial health through reorganization. Various first day motions were filed by the debtors, including a motion authorizing MUJI USA to continue to pay dues to suppliers, shippers, warehousemen and customs brokers. Muji plans to close unprofitable stores and renegotiate rents in the United States.
This news comes amidst a series of high profile bankruptcy cases – JC Penny, Neiman Marcus, J Crew, Brooks Brothers, etc., as well as other, lesser known companies, more than 100, that have had to file for bankruptcy in 2020 alone.
By filing for Chapter 11, the company attempts to survive what is hopefully a temporary situation both for the business and for the world economy. With assets between $50m and $100m and the support of their Parent company, the outlook for Muji USA could be a positive one.
Muji USA may consider a change in fashion trends and the overall transition from in-store shopping to online shopping. Apart from financial restructuring, additional business innovation to keep up with the times would contribute to the final development in this high profile bankruptcy case.
Carl D. Neff is a partner with the law firm of FisherBroyles, LLP, and practices in Wilmington, Delaware. You can reach Carl at (302) 482-4244 or at Carl.Neff@FisherBroyles.com.