Century 21, a discount department store based primarily in Manhattan and the greater New York area, declared bankruptcy and will close its remaining 13 stores.
The company cited its insurance company’s unwillingness to fulfill $175 million in business interruption claims as the primary reason for closing. Century 21’s lawsuit against insurance providers for failing to provide coverage has moved to bankruptcy court.
“While insurance money helped us to rebuild after suffering the devastating impact of 9/11, we now have no viable alternative but to begin the closure of our beloved family business because our insurers, to whom we have paid significant premiums every year for protection against unforeseen circumstances like we are experiencing today, have turned their backs on us at this most critical time,” said CEO Raymond Gindi, in a press release.
Insurance companies argue that businesses like Century 21 did not suffer any physical damage to their stores. Because damage was not caused by looting or riots, wildfires, or hurricane damage, Century 21 is not covered by business damage protection.
Insurance Information Institute spokesman Michael Barry argued that insurance companies must deny claims they aren’t obligated to pay to have the resources for the ones that are legitimate.
“To sell a policy that covers everything would be prohibitively expensive to the point where no one would even buy one,” Barry told CNN.
With locations in greater New York, New Jersey, Pennsylvania, and Florida, the store will be forced to lay off 1,400 employees and is offering going-out-of-business sales online and in-stores.
Doing so places Century 21 among other retail establishments, especially clothing stores, forced to close their doors.
Early on in the pandemic, non-essential businesses were forced to close their doors for weeks and expand their online shopping options. As states began to reopen, retailers found customers had become comfortable with Zoom attire and are spending less on business and formal wear, pushing many of these stores to close.