UPDATED, Sept. 10, 12:40 p.m.: Century 21 Stores is the latest retailer to file for bankruptcy, and it blames insurance providers for its collapse.
The New York-based off-price retailer filed for Chapter 11 bankruptcy on Thursday and announced it will wind down operations to close its 13 stores across New York, New Jersey, Pennsylvania, and Florida.
The company said it was forced to file for bankruptcy after insurance companies declined to pay its business interruption insurance claims worth $175 million.
“While insurance money helped us to rebuild after suffering the devastating impact of 9/11, we now have no viable alternative but to begin the closure of our beloved family business because our insurers, to whom we have paid significant premiums every year for protection against unforeseen circumstances like we are experiencing today, have turned their backs on us at this most critical time,” Century 21 co-CEO Raymond Gindi said in a statement.
Increasingly, companies are filing lawsuits against their insurers, alleging they are owed money for business interruption claims caused by the pandemic. Insurers argue that most of the policies have exceptions for viruses. Courts, for the most part, have sided with insurers.
Some states, such as California, New Jersey and New York, have proposed legislation that would require insurers to pay these claims.
Century 21 filed for bankruptcy in the Southern District of New York. The company said it is removing to the bankruptcy court a lawsuit pending in the Supreme Court of the State of New York against several of its insurance providers.
The company is planning a going-out-of-business sale at all of its locations and on its website.
Century 21 was founded in 1961 in Brooklyn. The store offers men’s, women’s, and children’s apparel, footwear, outerwear, lingerie, and accessories, along with beauty and home goods. Its locations include Manhattan, Brooklyn, Westbury, Rego Park, Valley Stream and Yonkers in New York; East Rutherford, Paramus, Elizabeth and Morristown in New Jersey; and Sunrise in Florida.
Traditional brick and mortar retail has been hit hard by the pandemic. Among the list of major retailers that have filed for bankruptcy are Tailored Brands, Brooks Brothers, J. Crew and Neiman Marcus Group, which is closing its anchor store in Manhattan’s Hudson Yards.
Nationwide, up to 25,000 retail stores could shut down this year, according to reports.