// Muji files for bankruptcy protection after falling £49 million in debt
// The Covid-19 pandemic has accelerated store closures
// This marks the first time a major Japanese retailer has sought Chapter 11 protection due to the pandemic
Muji has filed for bankruptcy protection after falling $64 million (£49 million) in debt as it struggles to survive amid increased rent payments.
The Japanese home goods retailer said the Covid-19 pandemic has accelerated store closures, while still having to pay sky-high rents for its prime retail locations.
The company listed a total debt of $64 million at the time of its Chapter 11 protection filing.
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The unit will produce a restructuring plan within 180 days, which will include store closures.
The filing marked the first time a major Japanese retailer has sought Chapter 11 protection due to the coronavirus pandemic.
Though the filing has taken place in the US, Muji’s UK stores also face the risk of permanent closure as it seeks to alleviate its debt.
The group plans to first negotiate rent payments, then shut down outlets with no hope of improving earnings.
If rent payments are successfully modified, it may still take time for Muji’s U.S. operation to get back on its feet because of the product strategy.
Goods sold in the US are mostly the same size as those sold in Japan, which does not match the local lifestyle.
Muji has followed the footsteps of Brooks Brothers, the 200-year-old fashion retailer that filed for Chapter 11 protection on Wednesday.
Brooks Brothers, which is known for its suits, had already shut some stores and prepared to close its US factories.