MUJI Files For Bankruptcy In The US – How Will That Affect Its S’pore Stores?

Last weekend, the brand at the forefront of minimalist aesthetics, MUJI, filed for Chapter 11 bankruptcy protection in the United States (United States), citing Covid-19 as the engine of this decision.

Its liabilities are listed between 50 million US dollars (69.5 million US dollars) and 100 million US dollars (139 million US dollars) and are due between 200 and 999 creditors.

Muji USA Bankruptcy Message
Image credits: MUJI USA via Twitter

The US household name unit joins a slew of more than 100 companies that have declared bankruptcy in the United States and cited the Covid-19 pandemic as a key reason.

Chapter 11 explained: Maybe there is hope for MUJI

Bankruptcy often leaves the impression of complete failure, but companies that have applied for Chapter 11 do not always go bankrupt.

Instead, corporate bankruptcy is likened to a “reset” button that can help a struggling business get back on its feet. In Chapter 11 proceedings, the court will assist a business to restructure its debts and obligations.

Many companies can use the bankruptcy process to close unprofitable operations, clear debt, or realign business strategies.

Businesses applying for Chapter 11 are also unable to make certain decisions without the permission of the courts. These include the sale of assets, other than inventory, the initiation or termination of a lease, and the cessation or expansion of commercial operations.

Although Chapter 11 focuses on reorganizing businesses and paying down debt in the process, there are a variety of possible outcomes if the reorganization fails.

For example, companies may end up selling their brand to a competitor. In 2016, when the famous retail brand American Apparel applied for Chapter 11, it was acquired by another retailer and relaunched. Although its management was entirely different, it looked exactly like the same brand to foreigners.

MUJI’s bankruptcy has no impact on Singapore yet

This law has also been taken up and adapted in one form or another in many other countries, including Singapore.

MUJI has managed to build a brand and follow its goal of minimalism and quality. The brand’s values ​​have become more and more applicable to its consumers.

Muji Minimalist Bankrupt in the United States Chapter 11
Image credits: MUJI via Facebook

In 2019, there were 1,033 MUJI stores worldwide, from Poland to Kuwait, a testament to its popularity and brand equity – factors that could likely help with its revival after Covid-19.

MUJI flagship store in Singapore / Image credits: Hype & Stuff

Although MUJI Singapore announced on Facebook that it ceased operations in its Marina Square store a month ago, it is still too early for Singaporeans to worry.

MUJI management did not disclose the reason for the closure, but it was unlikely to be related to the situation in the United States.

MUJI’s parent company Ryohin Keikaku said only its US stores demanded drastic cost-cutting measures. CEO Okazaki also said that the bankruptcy of MUJI in the United States would not affect its points of sale in Asia.

Singapore Management University professor of marketing and director of SMU’s Retail Center of Excellence, Dr. Kapil Tuli, said Singaporeans should not worry about store closings in the United States, as its business operations differ from ‘from one country to another.

MUJI has 10 points of sale remaining in Singapore and has welcomed Singaporeans into its stores since the country entered phase 2 of its reopening. Its Dine-in restaurant, Café & Meal, has also opened its doors to masked guests.

So there is no need to hoard your favorite MUJI notebooks or your minimalist kitchen utensils just yet.

Featured image credits: MUJI

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Jothi Venkat

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