In the wake of Hurricane Sandy many businesses have been negatively impacted financially throughout regions from Connecticut, New York, New Jersey, Pennsylvania and Delaware. Hardest hit are businesses located not only along the New Jersey, Staten Island and Long Island NY coasts but in areas that have never experienced such a devastating disaster. Areas such as Hoboken NJ, lower Manhattan and the NYC East Side. Even businesses located in inland communities.
Not only small “Mom & Pop” businesses but large businesses as well have been severely impacted by what many have referred to as Superstorm Sandy. For example a large retailer headquartered in New Jersey was forced to file for Chapter 11 relief under 11 USC 101 et seq. recently as a direct consequence of Superstorm Sandy and its aftermath. Big M, Inc. which operates a retail clothing store chain doing business under the trade names Mandee Store, Annie sez and Afaze filed for Chapter 11 on January 6, 2013. Big M operates stores located in Connecticut, Delaware, Florida, Illinois, Michigan, New Jersey, New York and Pennsylvania. It employed approximately 1,200 people.
Big M in recent years took measures to implement and carry out various critical cost-cutting and income producing measures. As a result of these efforts in 2012 Big M was tracking a positive $1.9 million EBITDA versus the negative EBITDA of $8.9 million the year prior. As a result of Superstorm Sandy practically all of Big M’s retail stores were closed in the New York, New Jersey and Connecticut Tri State area. A majority of its stores were closed for over a week. Does this sound familiar to other businesses? Big M’s business did not return to pre-Superstorm levels. Its customers were struggling with their own personal issues and Big M allegedly was not able to obtain insurance proceeds from its carriers in a reasonable and timely matter. Big M filed for Chapter 11.
Small businesses as well have experienced the same impact from Superstorm Sandy. All businesses whether retail, manufacturing or service businesses, large and small should consider seeking protection and relief under a Chapter 11 filing to save and salvage their business. Or consider other alternatives such as Out of Court work outs with creditors, Assignments for the Benefit of Creditors, judicial receiverships. One of these could be a viable option for a business either small, large or a sole proprietorship.
Finally, there are various Federal and State funds available to assist business recoveries such as the Hurricane Sandy Recovery Act and Community Development Block Grants. However, many business owners have little or no experience in participating in these programs. Businesses should seek immediate guidance from professionals who can help them comply with the Federal and State requirements to access these funds.