Between Covid-19 and the unexpected reversed economic cycle, many international and major startups and businesses in Vietnam had to file for bankruptcy, most of the enterprises in discretionary or non-consumer staple sectors, major part of which is aviation/oil&gas/retailing, such as Virgin Australia, Whiting Petroleum, JC.Penney, J.Crew, Gold’s Gym and in Vietnam are WeFit, Saigon SPP Packaging, etc.
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According to CNBC, the coronavirus pandemic has pushed many companies in the US struggling and bankrupt.
Home orders force many businesses in non-essential industries to close and weaken demand for all types of goods and services. In the past eight weeks, 36.5 million people have applied for unemployment benefits. The slowdown has hit some industries more difficult than others. The number of bankruptcy files has increased dramatically, with little or no revenue, according to data from the American Bankruptcy Institute. The group reported 560 Chapter 11 records (bankruptcy records) in April, up 26% from last year.
“As financial challenges continue to escalate during this crisis, bankruptcy will certainly be a temporary financial landing from the economic storm,” said Amy Quackenboss, executive director of the Bankruptcy Institute. Companies going into this recession without having a healthy financial background should feel a big shock from the recession, a sudden economic reversal. It is evident among retailers who have suffered from e-commerce competition and huge leverage before the pandemic. Retail sales fell 16.4% in April, with clothing stores accounting for the largest share.
This month, Neiman Marcus and J. Crew have filed for protection of Chapter 11. J.C. Penney is also considering filing for bankruptcy, possibly Friday, according to people familiar with the matter. However, with states starting to reopen businesses and removing restrictions at home, stores may see customers returning. The question is, whether these sales are enough to make a difference. Apparel retailers like Ascena and Tailored Brand were among “on the brink” companies.
In Vietnam, Wefit – a famous and pioneering fitness startup officially declared bankrupt.
According to a WeWow representative, the company regretted having to announce that after the crisis encountered since the beginning of 2020, despite great efforts to reform but later due to the impact of the Covid-19 epidemic, Wewow encountered unpredictable business and financial difficulties.
“Currently, our working capital is completely depleted, so we cannot maintain our business and products, WeWow is forced to stop all products (WeFit/WeFit Point/WeFit Pago/WeJoy) from 8:00 am on 11/5/2020. We have officially filed the Request for opening of bankruptcy procedures for Onaclover Technology Joint Stock Company at the People’s Court of Hanoi in accordance with the provisions of law“, said a WeWow representative.