I have written previously about the struggles of Gander Mountain and Payless Shoe Source, and they are not alone according to a recent Bloomberg article. Retailers are filing bankruptcies at a record rate. The cause? Online shopping. As more and more people shop online, brick and mortar establishments are closing stores at a rapid rate. There is a silver lining to this cloud. Rents for retail space are going down!
Despite filing a Chapter 11 bankruptcy in March, Gander Mountain will be closing 126 stores nationwide including the one in Janesville, WI, according to a report today in the Janesville Gazette. This will certainly be a loss to hunters, fishermen and other sportsmen in Rock County as the article included an interview with a customer who said that the next nearest comparable store would be Cabella’s in Sun Prairie. However, a short term benefit does exist in the form of a going out of business sale. The article did seem to hold out the possibility of the store continuing to operate under new ownership, but this has not been confirmed by anyone at Gander Mounatain.
This story piqued my interest because there is a Payless ShoeSource store next to our office. When I give directions to my office I say that I am across from the Post Office and most people have a general idea of where that is, but when I say I am next door to Payless ShoeSource a common response is, “I know exactly where you are!” So, given this seeming popularity I was surprised to read a report at mlive.com, based on a Bloomberg report, that Payless is planning on filing for Chapter 11 bankruptcy and closing 500 of their approximate 4,000-plus stores worldwide. The purpose of bankruptcy is to provide honest debtors who have fallen on hard times a fresh start. Hopefully, bankruptcy will provide Payless with the fresh start they need to get back on track and keep their Janesville store open.
The Milwaukee Journal Sentinel reported last month that,”Bankruptcy filings in Wisconsin fell to their lowest level in nine years in 2016 as an improving economy and jobs climate helped more consumers keep up with their debts.” The article raises the possibility that bankruptcies may increase in 2017 because it has now been eight years since the last peak in filings. Eight years is the amount of time required to elapse between the filing of consecutive Chapter 7 cases that provide the debtor a discharge of debts.
New median income numbers for the Bankruptcy Means Test go into effect on 4/1/2017 as follows for Wisconsin: A one person household goes from $47,804 to $48,407; 2 person household goes from $62,130 to $62,914; 3 person household goes from $75,230 up to $76,179; and a 4 person household goes from $88,133 up to $89,245. Add $8,400 for each individual in excess of 4. This is not much of a change, but at least they all went up. So, this is unlikely to be significant enough to help anyone pass the Means Test who was having difficulty passing it before these changes. If your gross income is below those numbers, you pass the Means Test. If you are over those numbers, you still may be able to pass the Means Test. It just becomes more complicated. If you have questions about the Means Test feel free to give us a call at (608)718-0497.