Bankrupt Century 21, Citing $175 Million Insurance Nonpayment, Will Cease Operations

dhita yudha

Pioneering off-price retail chain Century 21 Stores has filed for Chapter 11 bankruptcy protection and plans to shut all 13 of its stores in New York, New Jersey, Pennsylvania and Florida. The company has filed motions with the bankruptcy court to keep the stores and web site in operation in […]

Pioneering off-price retail chain Century 21 Stores has filed for Chapter 11 bankruptcy protection and plans to shut all 13 of its stores in New York, New Jersey, Pennsylvania and Florida. The company has filed motions with the bankruptcy court to keep the stores and web site in operation in order to run going-out-of-business sales.

In tandem with the filing, the lawsuit Century 21 filed against
several of its insurance providers — for nonpayment of losses the company
claims should have been covered by their policies — has been removed to the
bankruptcy court.

Noting that insurance payouts enabled Century 21 to reopen six
months after the Sept. 11, 2001 terrorist attacks, Co-CEO Raymond Gindi said
in a statement that the family-held company had “no viable alternative” to
bankruptcy after insurers declined to pay approximately $175 million for losses stemming from losses
due to COVID-19 business interruptions.

“While retailers across the board have suffered greatly due
to COVID-19, and Century 21 is no exception, 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, in hopes of another
incredible recovery,” Gindi added.

Bloomberg reported that “disputes over business interruption insurance have been landing in court in droves, with insurers contending that pandemics aren’t covered. More than 1,100 insurance lawsuits tied to COVID-19 have been filed nationwide, according to data compiled by law firm Hunton Andrews Kurth.”

“Insurance regulators approved exceptions for viruses after the SARS outbreak,” according to CNBC. Additionally, the publication reported in April that “the American Property Casualty Insurance Association said in a statement that pandemic outbreaks are ‘uninsurable.’”

Raymond Gindi and his Co-CEO and brother IG Gindi, who have
shared the top role since 2005, are the sons of Abraham “Al” Gindi, a Syrian
Jewish immigrant who co-founded Century 21 in 1961 with his cousin Samuel
“Sonny” Gindi. Their first store opened in the Wall Street business district near
the southern tip of Manhattan a decade before the Twin Towers of the World
Trade Center, which were destroyed on 9/11, rose up to dominate the skyline and
attract tourists.

The Aug. 31, 2018 Wall Street Journal obituary for 96-year-old Al Gindi noted how the attacks “blasted out windows in the flagship store and left the merchandise coated with ash. Business remained slow for a few years as lower Manhattan recovered.”

Century 21 survived the attacks and the growth of e-Commerce
that swamped many competitors, The Wall Street Journal noted, because “Mr.
Gindi avoided heavy debt and headlong growth. The founder liked to keep the
chain small enough so he could walk through all of the stores with a yellow
notepad and jot down thoughts on what needed improving.”

Source Article

Next Post

ECB addresses stronger euro, says it will 'carefully monitor' exchange rate

The euro hit a 1-week high of $1.1902 during the press conference following the policy decision. “The Governing Council discussed the appreciation of the euro, but as you know we don’t target the exchange rate,” ECB President Christine Lagarde said in a press conference Thursday. The ECB decided Thursday to […]