Even Big Corporations Are Casualties in This Pandemic, Many Struggling to Stay Afloat
Jul 2, 2020   •   Cristina Morales
8List.ph is published by ID8, Inc.
Jul 2, 2020   •   Cristina Morales
When COVID-19 was classified a pandemic earlier this year and governments started to impose lockdowns and quarantines, we knew that small businesses would struggle to stay open. In the Philippines, the Department of Labor and Employment (DOLE) has reported that 3,012 business establishments have filed for temporary closure while over 200 have filed for permanent closure, affecting about 100,000 employees.
In May, the ADB projected that the economic impact of the pandemic could reach $8.8 trillion globally, so it’s not just the small businesses that are hurting. Even huge international corporations are struggling to stay afloat, and many are already drowning. Here are just some of the biggest companies that have filed for bankruptcy, shut down, or laid off a significant number of employees due to the pandemic.
The pandemic forced the Cirque du Soleil Entertainment Group to close all of their shows, and after months of no income, the company has been forced to file for bankruptcy protection. (For those of you who aren’t familiar with financial jargon, bankruptcy protection is a measure companies can take when they’re on the verge of bankruptcy. Unlike straight bankruptcy, bankruptcy protection allows companies to reorganize and keep its business alive so it can pay its creditors over time.)
“With zero revenue since the forced closure of all of our shows due to COVID-19, the management had to act decisively to protect the Company’s future,” said CEO Daniel Lamarre.
In March, the company laid off 4,000 people. After filing for bankruptcy protection, the company will be cutting 3,500 more jobs.
Montreal-based footwear retailer Aldo has been struggling for years as more people shifted towards casual footwear. In 2018, CEO David Bensaudon had said that they were competing with athletic brands as more workplaces embraced casual attire. So when the pandemic hit and stores were forced to close down, the company struggled even more.
“It is no secret that the retail industry has experienced rapid and significant change over the last several years,” Aldo chief executive officer David Bensadoun said in a statement. “We were making strong progress with the transformation of our business to tackle these challenges; however, the impact of the Covid-19 pandemic has put too much pressure on our business and our cash flows.”
Aldo filed for bankruptcy protection on May 7. While it reorganizes, the company will carry on with business through its e-commerce websites and will reopen stores based on guidelines set by local governments and health authorities.
After more and more people turned to online shopping, brick-and-mortar retailers struggled to keep up and adapt, so that the coronavirus pandemic only intensified the industry’s struggle. On April 6, the 241-year-old UK retailer Debenhams entered administration (which means that an appointed insolvency practitioner has taken control of the company from its directors and is now managing the business).
Debenhams is still working on reopening as many stores as possible when lockdowns are lifted, but is closing its business in Ireland permanently.
After its almost 700 gyms all over the world had to close due to the pandemic, Gold’s Gym filed for bankruptcy protection on May 4. In a statement, the company stressed that they are not going out of business, and plans to get business back on track by August 1, 2020.
Also, it’s important to note that franchisee-owned Gold’s Gym locations (such as the ones here in the Philippines) are not part of the bankruptcy filing and aren’t affected by this decision.
Last month, Victoria Court CEO Angelina Mead King announced that they would be closing several branches of their motel chain.
“For now, I have to advise you to please look for another job to support yourself and your family during these tough times,” she said in a video message sent to employees. “And when the business does reopen again, you’ll be the first ones that we call back.”
Later, Angelina’s brother Atticus clarified that only the branches under Angelina would be closing down. Angelina manages the southern locations of Victoria Court, while Atticus manages the northern locations.
In May, Airbnb announced that it was laying off 25% of its global workforce to cut costs in the face of declined revenues.
“We are collectively living through the most harrowing crisis of our lifetime, and as it began to unfold, global travel came to a standstill,” Airbnb CEO Brian Chesky wrote in a note to public statement. “Airbnb’s business has been hit hard, with revenue this year forecasted to be less than half of what we earned in 2019.”
The travel and tourism industries are among the hardest hit in the pandemic. The World Travel and Tourism Council has warned that the COVID-19 pandemic could cut 50 million travel and tourism-related jobs worldwide, with Asia being the worst affected.
Big businesses here in the Philippines have also felt the terrible impact of the pandemic. The travel and tourism industries, in particular, are among the hardest hit. Local airlines have laid off hundreds of employees, while travel and tourism brands are struggling to hold the fort. One of the hardest hit in Metro Manila is Okada Manila, which has had to cut more than 1,000 jobs to “remain a viable business” after the community quarantine forced it to cease operations.
“Those who will be affected will receive their notice starting June 15. They will receive a separation pay in accordance with law,” Okada Manila president Takashi Oya said in a memo. “For those who will remain, they will continue to build Okada Manila’s readiness to the new normal and provide the same Five-Start experience that it is known for.”
According to BankruptcyData, the US restaurant industry has the most bankruptcy filings in 2020. Just yesterday, NPC International, which is the company that owns and operates more than 1,200 Pizza Hut and nearly 400 Wendy’s restaurants in the US, filed for bankruptcy protection
In the Philippines, we’re seeing new restaurants, as well as beloved institutions (like Baguio’s Forest House and Alan K’s comedy bars Zirkoh and Klownz), closing their doors permanently.
DOLE has proposed a subsidy for employers to secure jobs. “Our proposal is to subsidize our employers by 25 to 50 percent provided that they retain their employees or even increase their employees,” Labor Secretary Silvestre Bello III said in an online briefing in June. However, there haven’t been any concrete updates on this proposal. For now, we’ll just have to keep our fingers crossed.
How has the pandemic affected your livelihood? Tell us all about it in the comments.
Though a chronic dabbler in whatever tickles her fancy, Cristina claims she can count her passions on one hand: feminism, literature, the environment, embroidery, and the power of a solid pop song. She lives in Uniqlo lounge pants and refuses to leave the house without a winged eye.
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