Off-price retail pioneer Century 21 Stores filed for bankruptcy on Thursday with a plan to close all its stores, citing the refusal of its insurers to cover its losses from the coronavirus pandemic.
The liquidation of Century 21’s assets through the Chapter 11 bankruptcy process would end a run of nearly 60 years for a business that was founded by the Gindi family in Bay Ridge, Brooklyn, in 1961.
The company, which has 13 stores mostly in New York City and the surrounding metropolitan area, generated approximately $747 million of revenue in fiscal 2019 but, like other retailers, had been hit hard by the pandemic, which forced it in mid-March to close all its locations.
Even with stores having reopened, Century 21 said it could no longer stay in business because its insurers “have turned their backs on us at this most critical time,” declining to provide the $175 million it was seeking in coverage for business disruption losses resulting from the pandemic.
“We are confident that had we received any meaningful portion of the insurance proceeds, we would have been able to save thousands of jobs and weather the storm,” co-CEO Raymond Gindi said in a news release.
Century 21 sued its insurers in July but CFO Norman Veit said the company had to file bankruptcy in part to prevent its landlords from pursuing eviction proceedings to judgment and/or seizing its inventory to satisfy rents due.
“The debtors believe that [the bankruptcy] court can provide an expedited resolution of the insurance action that will yield significant proceeds and certainty for the debtors and their estates,” he said in a court declaration.
As New York Magazine reports, Century 21 was famed as “a discount mecca: a treasure trove where, if you were willing to spend hours digging (and maybe get into a fight), you could find a holy-grail luxury item at something like 99.99 percent off.”
But even before the pandemic, Veit said, it had been adversely affected by “the shifting of sales from traditional brick-and-mortar retailers to online retailers, and changing consumer preferences.”