Distressed businesses often file for Chapter 11 bankruptcy to reorganize their operations and financial condition under court protection to allow them to continue operating.
When all seems lost and a company can no longer operate, businesses might go one step further and file for Chapter 7 bankruptcy to liquidate and shut down their operations.
Don't miss the move: Subscribe to TheStreet's free daily newsletter
In another situation, a company might liquidate its products, wind down operations, and shut its doors without filing any bankruptcy petition.
Related: Bankrupt pizza chain operator unloads dozens of restaurants
In many cases, you have retailers like LL Flooring or Big Lots, file for Chapter 11 protection, close several store locations, and continue operating.
Then you have businesses like discount retail chain 99 Cents Only in April filing for Chapter 11 bankruptcy, liquidating its inventory, and closing all of its stores.
In the third scenario, Robinson, Ill.-based trucking and logistics company Midwest Transport, which had a contract with the U.S. Postal Service to haul mail, in September unexpectedly shut down its business with plans to wind down operations, according to sources familiar with the situation. But it didn't file for bankruptcy.
Midwest Transport's regional managers reportedly notified employees by phone late on Sept. 5 that the company was winding down operations. The company, which employed over 480 drivers among about 650 workers, has not made a statement about it abruptly ceasing operations and still has not filed for bankruptcy protection.
The company's website was still working on Oct. 1, but its phone number was not.
Yelloh closing down operations in November
Finally, iconic frozen foods retail delivery company Yelloh, formerly known as Schwan's, said it will cease all operations in November, citing multiple insurmountable business challenges, including economic and market headwinds and changing consumer lifestyles. The company has not filed for bankruptcy as of Oct. 1.
Related: Struggling retailer closes more stores in Chapter 11 bankruptcy
"It’s with heavy hearts that we made the difficult decision to cease operations of Yelloh,” CEO Bernardo Santana said in a Sept. 23 statement. “We are thankful to our many loyal customers and hard-working employees for everything they have done to support us.
"I am deeply grateful for our employees’ tireless and bold efforts, and our customers’ dedication. It has been our utmost pleasure and honor to serve our customers their favorite meals and frozen treats,” Santana said.
The Marshall, Minn., frozen foods home delivery company was established in 1952 as Schwan's, delivering frozen meals, foods, treats, and ice cream to American homes in its fleet of yellow trucks.
More bankruptcy stories:
- Big Lots retail chain ready to file Chapter 11 bankruptcy
- Popular retail product maker files for Chapter 11 bankruptcy
- Mattress Firm rival files for Chapter 11 bankruptcy
The company, which grew into the nation's largest fleet of freezer trucks, began facing headwinds over the last 20 years from changing consumer lifestyles and competitive pressures. The company also began having nationwide staffing difficulties, and the Covid-19 pandemic in 2020 caused severe food supply chain disruption.
“Our concern is now for our employees and caring for them as we all come to terms with the fact that this business – that served millions of families and provided a livelihood for thousands over the decades – has regrettably run its life cycle,” Yelloh board member Michael Ziebell said in a statement.
Related: McDonald's biggest problem may fix itself soon
"Digital shopping has replaced the personal, at-the-door customer interaction that was the hallmark of the company,” Ziebell said.
Yelloh will wind down its operations over the next two months, the statement said, and has already issued notices to employees under the Worker Adjustment and Retraining Notification Act. Its final day of delivery will be Nov. 8.
The direct-to-consumer frozen food delivery company employs about 1,100 workers and delivers products by direct shipping or its yellow freezer trucks. Yelloh has not indicated whether it will file for bankruptcy.
Related: Veteran fund manager sees world of pain coming for stocks
