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Week 3 Assignment

This document discusses the impact of the COVID-19 pandemic on several major US companies that filed for bankruptcy in May 2020, including Gold's Gym, Hertz, JCPenney, J.Crew Group, Neiman Marcus, and Tuesday Morning. Bankruptcy allows companies to eliminate debt but can also lead to closure. For publicly traded companies, bankruptcy has major consequences for investors as stocks often become worthless. The companies that filed in May all chose Chapter 11 bankruptcy, seeking financial restructuring instead of liquidation.

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Tristian Harvey
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60 views

Week 3 Assignment

This document discusses the impact of the COVID-19 pandemic on several major US companies that filed for bankruptcy in May 2020, including Gold's Gym, Hertz, JCPenney, J.Crew Group, Neiman Marcus, and Tuesday Morning. Bankruptcy allows companies to eliminate debt but can also lead to closure. For publicly traded companies, bankruptcy has major consequences for investors as stocks often become worthless. The companies that filed in May all chose Chapter 11 bankruptcy, seeking financial restructuring instead of liquidation.

Uploaded by

Tristian Harvey
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Running head: WEEK 3 ASSIGNMENT 1

Week 3 Assignment

Melanie Brown

May 30th, 2020

Instructor: John Buchanan, Ph.D.

Word Count: 320


WEEK 3 ASSIGNMENT 2

Week 3 Assignment

The COVID-19 pandemic has put a strain on economies globally. This has resulted in

temporary store closures, decreased demand for travel, and increased online ordering. This

climate made bankruptcy a possible reality for many notable companies in the United States.

This is especially true for companies already struggling like Gold’s Gym, Hertz, JCPenney,

J.Crew Group, Neiman Marcus, and Tuesday Morning. While these companies filed for

bankruptcy, it’s not certain that they will cease operating. This could be an opportunity for some

companies to eliminate liabilities, like debt. Although General Motors has filed for bankruptcy

previously, they have gone on to post record profits afterwards. There is still the very real

possibility of these businesses closing.

Of the six companies mentioned in the article, Hertz, JCPenney, and Tuesday Morning

are publicly traded. This means that these companies have sold their shares on a public stock

exchange by filing an initial public offering to the public. When a publicly traded company files

for bankruptcy there are major consequences for investors and stockholders. Filing for

bankruptcy means a company is unable to repay any outstanding debts. There are two types of

bankruptcy, Chapter 11 and Chapter 7. Chapter 11 bankruptcy means a company is asking for

protection from their creditors until they have a plan for financial recovery and Chapter 7

bankruptcy means a company has officially ceased operating and their assets will be sold to

repay any debt. Gold’s Gym, Hertz, JCPenney, J.Crew Group, Neiman Marcus, and Tuesday

Morning filed for Chapter 11 bankruptcy. Leading up to and following a bankruptcy filing, there

is sometimes a scramble by stockholders to sell their socks to limit the loss of their investment. A
WEEK 3 ASSIGNMENT 3

company’s stocks can easily become worthless in this situation. Their price to earnings ratio,

price/earnings-to-growth and dividend yield ratio, 1-year return, and earnings per share

decreases. This is while their price to book ratio and price to sales ratio increases.
WEEK 3 ASSIGNMENT 4

Works Cited

Valinsky, J. (2020, May 29). Big chains filed for bankruptcy every week in May. Here are 6 of

them. Retrieved from CNN Business: https://www.cnn.com/2020/05/29/business/may-

bankruptcies-coronavirus/index.html

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