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Harve Light: Big Box Holiday Cheer To Be Lacking In 2017 – The Toy Book

Harve Light wrote an article for The Toy Book titled “Big Box Holiday Cheer To Be Lacking In 2017.”

EVERYONE IS TALKING ABOUT THE STATE of the retail industry and the seismic changes that it is undergoing. Hardly a week goes by that another retailer hasn’t filed for bankruptcy protection. If they aren’t already, lenders and suppliers should monitor their exposure closely. Often lost in the flurry of activity surrounding a large bankruptcy is the effect a bankrupt retailer can have on the rest of the supply chain. We call this the ripple effect. These bankruptcies have profound short- and long-term effects on working capital and financing arrangements for the entire supply chain.

The most recent example is the Toys “R” Us bankruptcy filing. While not a complete surprise, it sent shockwaves throughout the supply chain. More than 100,000 creditors are now scrambling to determine the effect it will have on the all-important upcoming holiday season and beyond. The immediate impact will likely cause several of them to seek bankruptcy protection, as they are now likely facing working capital challenges themselves. Most lenders immediately classify accounts receivable from customers in bankruptcy as ineligible because of the low probability of collection.

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