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Corporations adjust as consumer spending shifts

The recent economic environment has been favorable for some Pennsylvania businesses. However, others have suffered as consumers have looked elsewhere to spend their money.  Although stocks have seen increased growth, many corporations have suffered, and in 2016 commercial bankruptcies increased in excess of 25 percent as compared to the previous year.

Retail corporations have been at the forefront of the economic shift. Consumer spending patterns have changed in recent years, and many stores have had to find ways to adjust. Some retailers have proved to be quite successful in navigating the ever-changing environment. Unfortunately, this is not true of all retail corporations.

Over the past year, a number of retails have filed for bankruptcy in an attempt to reorganize and liquidate. For most, the intention is to make the necessary adjustments to the company and its debt structure. This will then hopefully allow the corporation to once again become a profitable enterprise.

Recently, some economic advisors have begun to question the viability of Sears Holdings plans to make adjustments to their business and debt structure. Sears has recently announced its plans to sell its Craftsman tool line and to close 150 storefronts. While these steps may be viewed as a positive step in the right directions, concern has been raised about the long term repercussions of selling the Craftsman tool line as it is a brand recognized as belonging to Sears.

Pennsylvania has its fair share of retail operations. Some of these retailers are one-store operations while others are large, multi-store corporations. Regardless of size or number of locations, each retailer must adjust as consumer spending changes. Sometimes this adjustment comes in the form of reorganization via bankruptcy. Experienced legal counsel can help guide a struggling corporation through the process of determining if this is the appropriate step to take.

Source:, "Edward Lampert's Sears Strategy Is Likely to Backfire on Shareholders", Charles M. Tatelbaum, Jan. 11, 2017

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