September 10, 2020 | 9:36am | Updated September 10, 2020 | 12:58pm
Off-price clothing retailer Century 21 — a mecca for generations of fashion-minded bargain hunters — filed for bankruptcy on Thursday and said it will shutter all of its stores for good, blaming insurance companies that failed to pay up during the pandemic.
Known for deeply discounted designer goods, the department store has been a retail anchor for decades in lower Manhattan, where it rebuilt its store across the street from the World Trade Center after severe damage from the Sept. 11 terrorist attacks.
The retailer said its 13 stores in New York, New Jersey, Pennsylvania and Florida will begin holding going out of business sales — a total surrender that took bankruptcy experts by surprise.
“People are shocked they are liquidating,” said bankruptcy attorney Joseph Sarachek, who represents a watch maker in the filing. “It could be that customer traffic is so, so down that they just don’t see a way out of it.”
The surprise plan to shutter the chain for good likewise flabbergasted shoppers, who kvetched about the demise of the 60-year-old retailer on social media.
“Sad to see this legend shutter. I purchased so many iconic looks from Century 21,” wrote Twitter user Liz Lapp. “Anyone else remember rummaging through the bins for Prada and Gucci deals?
“This is so sad and unbelievable… damn you coronavirus,” tweeted another customer.
The New York-based company filed for Chapter 11 bankruptcy in federal court in Manhattan and it moved a lawsuit against its insurance companies to the bankruptcy court, the company said.
“While insurance money helped us to rebuild after suffering the devastating impact of 9/11, we now have no viable alternative but to begin the closure of our beloved family business,” co-CEO Raymond Gindi said in a statement.
The retailer, Gindi added, is being forced to shutter “because our insurers, to whom we have paid significant premiums every year for protection against unforeseen circumstances like we are experiencing today, have turned their backs on us at this most critical time.”
“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 wrote.
Century 21 cited $175 million that was never paid out by its insurance companies as tipping the scales for the beloved retailer — and it appears to be the first major retailer to blame its problems on insurance providers not paying out business interruption insurance, experts said. The company listed assets and liabilities of $500 million in its bankruptcy petition.
Still, bankruptcy experts are puzzled by the fact that the company does not owe more money to vendors, with the largest creditor — CIT Group — being owed $5.9 million and the second largest Phillips Van Heusen Corp. owed $4.8 million and 30th creditor owed just $350,000.
“It’s just not that large a sum,” Sarachek said. “There should be a solution, but the fact that the Gindis who are sophisticated, well-respected operators aren’t prepared to run a classic restructuring turnaround speaks volumes.”
Century 21 is the latest iconic retailer to succumb to bankruptcy as the coronavirus continues to force lockdowns nationwide. Other recent Chapter 11 casualties have included JC Penney, Neiman Marcus, J.Crew and Brooks Brothers.