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Century 21 will close all stores; declares bankruptcy
Bloomberg reports that Century 21 will close all its department stores and file for bankruptcy today. The family that founded and owns the stores — the Gindi family — said in a statement that they had “no viable alternative” once their insurance providers declined payouts for the coronavirus.
“The insurance companies ‘turned their backs on us at this most critical time,’ CEO Raymond Gindi said in the statement in Bloomberg. “’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.’”
I don’t need to tell readers that this is a huge blow to Downtown, since the store takes up an entire city block and is a neighborhood institution. More tourists stop to ask me where Century 21 is on my corner near the Chambers Street 1/2/3 than the 9/11 Memorial. (Number 3 is Korin.)
Sonny Gindi and his cousin Al Gindi founded Century 21 in 1961, taking 6000 square feet at 22 Cortlandt. (It is now 220,000 square feet.) Sonny died in 2012 and Al in 2018, but it is Al’s sons who are the co-CEOs today.
Members of the family — there are a lot on both sides — own tons of properties downtown as well, including the building on N. Moore that house both Smith & Mills and Yves, as well as 109 W. Broadway, which once housed Summer Day Cafe now has Tiny’s satellite curbside dining.
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so sad..
Apparently Century’s insurer would not cover its losses during the pandemic — I’m just assuming but it was closed for a long while. I understand that most insurance contracts have a force majeure clause expressly excluding losses due to viruses, so-called “acts of god,” etc. The insurer (not sure if it was the same one or not) did cover some of its losses after 9/11 but this is considered of a different order. After the failure of Lord & Tailor to attract a buyer, one cannot be optimistic about Century’s prospects in this regard. This is a crushing blow to downtown, to NYC in general, and, of course, to retail brick and mortar businesses.
Apparently Century 21 will move its lawsuit against the insurers into Bankruptcy Court, to gain leverage. The policy will now be treated as an asset of the debtor, and the Bankruptcy Court will have greater powers and “influence” to push for payouts in order to fulfill the Bankruptcy Court’s mission to pay off creditors.
From its press release:
“To accomplish an orderly wind down in the most efficient manner to maximize the value of its assets for the benefit of its stakeholders, the Company voluntarily filed for relief under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Concurrently, the Company is removing to the Bankruptcy Court a lawsuit pending in the Supreme Court of the State of New York against several of its insurance providers based on their failure to compensate the Company for its losses under the policies. The Company is requesting that the Bankruptcy Court expedite the adjudication of the suit for the benefit of its stakeholders.”
https://www.prnewswire.com/news-releases/century-21-stores-to-commence-wind-down-of-retail-operations-301127393.html
It’s true that commercial insurance policies have an exclusion for losses due to virus-related causes. After 9-11, most policies also exclude losses due to terrorism unless there is a rider AND the government has declared the event to be terrorism. Interestingly, there hasn’t been a government-declared terrorism event since 9-11.
I read about this. SO, so sad. A big loss to downtown. Big tourist attraction, brought a lot of foot traffic and money to the area. Whether you liked the influx of tourists or not, C21 was a boon to downtown. Personally, I will miss it.
We are only in the first year of the second decade of the 21st century, and the Century is no more.
Something is a little off here. I can understand needing to seek bankruptcy protection, but a lot of steps here were seemingly skipped – like attempting a restructuring, closing some stores, attempting to refinance any debt, etc etc. A bit odd to declare bankruptcy and immediately fold up all the tents and pull the plug. More to come methinks
Chapter 11 is a reorganization plan that protects the entity from all creditors while it is reorganizing. So maybe, maybe, they will find a way to emerge from this. But I doubt it given the blows brick and mortar retail has suffered since the onset of the digital age.
Thanks. I know what a bankruptcy reorganization plan is. When you enter into a bankruptcy reorganization plan and hope to re-emerge, you don’t close all your stores and announce you are going out of business and liquidating everything. Obviously.
I agree with BobR, something is not right. They also own a lot, and I mean a lot, of real estate, not just downtown, but in the metro area. Plus they have expanded quite a bit in the last ten years and became more of a department store rather than a discount store. More going on here.
What’s missing is the fact that Century 21 is partially owned by a private equity firm, as were other notable retail businesses that went bankrupt.
When the pandemic struck, they received, and then exhausted, Federal CARES funds. They approached their private equity backers, to to raise money from them. Their backers refused, forcing them into bankruptcy.
The insurance issue is separate from that. Business interruption insurance is for physical damage only. Assuming they could have gotten insurance for some thing like the pandemic, it would’ve been extraordinarily expensive.
Even if they win their insurance lawsuit, the 15 stores they own nationally will have been long closed, and their 4,000 employees unemployed.
Just a thought. If they closed all the other Century 21 location and keep the Fulton street location open could help with the overhead cost. So sad to see it go. It was my go to since it opened at 7am.
The elephant in the room:
Century 21 has nothing you can’t get online. It is (soon to be “was”) a relic of a bygone age.
The future of that space could be a multilevel mall with a food court, farmer’s market, a multiplex movie theater, and luxury housing above it.
Add a skyway between it and the hotel.