Sometimes a struggling retailer manages to mask its troubles, so customers have no idea that anything might be wrong.
That's a good tactic in some ways, especially for a privately held company, because when vendors learn that a company has financial problems, they tighten terms and even ask for cash upfront.
That can be devastating for a retailer that already has cash-flow problems as it makes it harder, if not impossible, to keep shelves stocked. Once inventory becomes scarce, the chances of a turnaround become much bleaker.
Related: Restaurant chain closes dozens of locations as bankruptcy looms
You can't sell your way out of a financial crisis without having anything to sell. With public companies like the now-liquidated Bed Bath & Beyond, Christmas Tree Shops and Tuesday Morning, cash-flow issues were clear to vendors because they had to publish financial reports due to SEC regulations.
If your vendors know you are in trouble, that tightens the window to turn things around. It does happen: Joann recently emerged from bankruptcy after working with its creditors and vendors to keep the company afloat.
Private companies, however, lack some of that transparency. That makes it easier to disguise their problems, but that can also lead to sudden, unexpected shutdowns.
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Foxtrot Market closes unexpectedly
Foxtrot Market, which operated 33 locations in Chicago, Washington, Dallas and Austin, closed its doors suddenly in April. The closure was abrupt and workers did not receive any notice.
Related: Bankrupt essential retailer liquidates several more stores
The company's owners posted a farewell letter on its website.
"It is with a heavy heart that we must inform you of a difficult decision we have had to make. After much consideration and evaluation, we regret to announce that Foxtrot and Dom's Kitchen and Market will start on April 23, 2024," the company wrote.
The company said that it explored various options to continue and was not able to find a path forward "despite good faith and exhaustive efforts. This decision was not made lightly, and we understand the impact it will have on you, our loyal customers, as well as our dedicated team members," the letter continued.
At the time of its closing, a public notice was filed that said the grocery chain's assets would be auctioned off.
On May 10, 2024, at 10 a.m. Pacific Time, a foreclosure sale of substantially all of the assets of Foxtrot Ventures Incorporated; Foxtrot Retail, Inc.; Foxtrot Retail D.C., LLC; Foxtrot Intermediate Texas, Inc.; Foxtrot Retail Texas, Inc.; and Foxtrot Holdings Texas, Inc. will take place via Microsoft Teams video conference conducted by DLA Piper LLP (US), counsel to the debtor’s secured creditor JPMorgan Chase Bank, N.A. The sale may be canceled or continued from time to time at the direction of JPMorgan Chase Bank, N.A.
That sale has now taken place and what's left of Foxtrot has a new owner.
More bankruptcy:
- Another airline strands passengers as it files bankruptcy
- Luxury apparel chain shuts U.S. stores in Chapter 15 bankruptcy
- Famous restaurant files for Chapter 11 bankruptcy
Foxtrot's assets have been sold
Some fans of the chain have been hopeful that a buyer who would reopen at least some Foxtrot locations would step in. A buyer has been found, but whether it plans to bring back all or part of the chain is unclear.
"Holding company Further Point Enterprises, which was already an investor in the upscale convenience store chain, according to its website, acquired Foxtrot’s assets for $2.2 million during a foreclosure sale on Friday," RetailDive reported.
As was outlined in the public notice, the foreclosure sale was led by JP Morgan Chase over Microsoft Teams. The items sold included Foxtrot’s inventory, intellectual property, furniture, fixtures and equipment, and goods.
Foxtrot's new owner has not commented on what it intends to do with the assets and does not appear to have a website. The grocery chain did not file for Chapter 7 or Chapter 11 bankruptcy.
Update 5/16 9:45 a.m.: Foxtrot has filed a formal Chapter 7 bankruptcy with the U.S. Bankruptcy Court for the District of Delaware. That filing was agreed upon by the company's board in late April but was not turned in to the court until May 14.
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