Century 21 files for bankruptcy protection after failing to receive the insurance money the company believes it deserves.
Century 21 joins the growing number of businesses succumbing to filing for bankruptcy protection amid the pandemic. On Thursday, the company announced that it will also cease operations. Century 21 points to its insurer as to why they made the decision.
Century 21 Closing Shop
The company actually owns 13 stores. Locations include New York, New Jersey, Pennsylvania, and Florida. It also employs 1,400 staff as of last week.
New York department store chain Century 21 filed for bankruptcy Thursday and said it will shut down its business https://t.co/dP5GyvE24q
— CNN Business (@CNNBusiness) September 13, 2020
The company also saw the devastating effects of the pandemic on many businesses, including retailers. Many department store chains also struggled with a drop in sales during this health crisis. On top of that, restrictions also forced many stores to close for several months.
Other similar businesses to file for bankruptcy protection include Lord & Taylor and JC Penney.
The 60-year-old NY department store chain explained that the reason for such a decision stems from failing to get insurance.
Not Able to Insure
Century 21 said that the lack of insurance money pushed them to close. The company did not get the insurance money, amounting to $175 million, it had filed for business interruption. The company sought to recover the revenue it did not make when their stores closed due to the pandemic.
According to the co-chief executive of Century 21, Raymond Gindi, their insurers “turned their backs on us at this most critical time.” Therefore, the company has no other option but to “begin the closure of our beloved family business.”
Moreover, the company also noted that the same insurance payments helped them during the September 11 attacks. At that time, their store near the World Trade Center was destroyed.
In addition, the company also believes that if they obtained “a meaningful portion” of the insurance money, it could survive. Century 21 also claimed that the company has “paid significant premiums every year for protection against unforeseen circumstances.
However, an industry trade group spokesperson disagrees. According to Michael Barry of Insurance Information Institute, policies about insuring business interruptions do not cover pandemic-related losses.
CNN quoted Barry saying: “To sell a policy that covers everything would be prohibitively expensive.”