Vitamin World, a retailer of vitamins and health supplements, filed for Chapter 11 bankruptcy on September 11, 2017. In its bankruptcy petition, the corporation identified 51 of its 334 stores that have plans to close during the bankruptcy process. Prior to the case filing, Vitamin World closed 45 stores since early 2016.
Currently Vitamin World employs 1,500 people. Many of these employees will be able to keep their jobs through the course of the bankruptcy.
Chapter 11 bankruptcy is designed for businesses seeking to restructure and create a repayment plan to pay back its debts over time. In this way, Chapter 11 works similarly to Chapter 13 but is specifically for business instead of individual consumers. Chapter 11 has the power to help a company avoid liquidation and having to shut down completely.
Michael Madden, Vitamin World’s CEO, said in a statement that the company seeks to “exit real estate leases that were negotiated by its previous owners.” Chapter 11 bankruptcy will create an opportunity for the company to attempt to negotiate more favorable terms on its current lease agreements.
Madden also said, “This action will empower us to move forward as a stronger organization that can and will continue to serve our millions of loyal customers with premium offerings via retail and online channels.” Vitamin World’s inventory at the time of filing was valued at around $30 million. Among other debts, the company owes $14.4 million in accrued interest on secured debt and $9.5 million on a seller note originating from the company’s buyout by a private equity company in 2016.
It is not uncommon for Chapter 11 bankruptcy filings to be successful and save a company from collapse. In fact, a number of well-known corporations have sought the protections and benefits of Chapter 11 bankruptcy. For example, Chrysler filed in 2009 and American Airlines in 2012. If you’re interested in learning more about business bankruptcy, Business Insider compiled an interesting review of The 11 Largest Bankruptcies In American History.
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