USA Trends and Developments Contributed by: Harold D. Israel, Levenfeld Pearlstein
growth stall and bear the brunt of higher costs for essentials. This impacts spending in an uneven way. As of 30 June 2025, the top 10% of earners now account for 49.2% of total spending, compared with 45.7% a decade ago, according to Moody’s Analytics. Troubled industries and notable 2025 bankruptcies The financial issues described above have not affect - ed all industries equally. Some sectors have proven more resilient, while others have been unable to han- dle the combination of rising costs, changing con - sumer behaviour and structural shifts in the econo - my. Bankruptcy filings in 2025 tell a clear story about which industries are most vulnerable and why. Consumer discretionary: when spending slows The consumer discretionary sector, which includes retail, restaurants and entertainment, has been hit particularly hard. This sector is inherently vulnerable during economic downturns because consumers can easily cut back on non-essential spending. However, the current situation is more severe because it com - bines reduced consumer spending with higher oper - ating costs. Hooters and Pinstripes, American casual dining chains, filed for Chapter 11 bankruptcy protection in 2025 (Hooters filed March 31st, and Pinstripes filed September 8th), both citing ongoing financial difficul - ties and changing consumer preferences as key fac - tors. As part of their restructurings, both entities will be reducing the number of locations. Retail and hospitality: structural overcapacity meets demand shock The retail sector continues to struggle with structural overcapacity, particularly in brick-and-mortar stores. The pandemic accelerated the shift to online shop - ping, and many consumers have not returned to their pre-2020 shopping habits. In July, The Washington Post reported that Procter & Gamble was one of several companies to announce they were raising prices, and many companies have subsequently modified their earnings guidance to reflect both the impact that tariffs have had on their margins and on consumers choosing less expensive private label brands.
Forever 21’s second bankruptcy filing in six years, occurring on 16 March 2025, exemplifies the chal - lenges facing traditional retail. Once a shopping mall staple, the budget fashion retailer cited increased competition from online fast fashion retailers like Shein as a primary factor in its downfall. Rite Aid’s second bankruptcy filing in less than two years demonstrates the ongoing challenges in phar - macy retail. The company filed for Chapter 11 protec - tion on 5 May 2025, less than two years after emerging from its previous bankruptcy in 2023. Even after clos - ing around 800 stores and selling off subsidiaries, the company could not achieve sustainable profitability in the face of changing healthcare delivery models and increased competition from online pharmacies and big-box retailers. Hudson’s Bay, the iconic department store chain and the oldest company in North America, filed for Chapter 11 bankruptcy protection on 7 March 2025. The company cited declining sales, competition from online retailers, and international trade issues. Despite its historic significance and brand recognition, Hud - son’s Bay could not overcome the fundamental chal - lenges facing traditional department stores. Technology not immune The technology sector has also been impacted by changing economic conditions. 23andMe, the popu - lar mail-in DNA testing company, filed for Chapter 11 bankruptcy on 23 March 2025, after struggling with decreased demand, declining revenues and the con - tinued fallout from a massive 2023 data breach. Nikola Corporation, the Arizona-based EV and hydro - gen-powered vehicle start-up, filed for Chapter 11 bankruptcy on 19 February 2025, resulting from the company’s inability to translate technological prom - ises into profitable operations. Healthcare: financial pressures across the board Healthcare firms are facing significant margin pres - sure from regulatory shifts, changing reimbursement models and increased competition. Genesis Health - Care, one of the nation’s largest skilled nursing chains, filed for bankruptcy on 9 July 2025, saying it needed to address its “legacy debt structure”. Other Chapter
532 CHAMBERS.COM
Powered by FlippingBook