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Century 21 declares bankruptcy and will close all its stores

Century 21 has 13 stores primarily in New York City and the surrounding metropolitan area. As of Thursday, it had 1,400 employees. The company blamed non-payment of his business interruption insurance as a cause of his disappearance.

But Century 21 said the final straw was the fact that it didn’t get the $ 175 million it had filed with its business interruption insurance. She said politics had saved her in the wake of the 9/11 terrorist attacks: she had a shop directly across the street from the World Trade Center, which was destroyed. But he said he wasn’t able to get paid this time.

“We now have no viable alternative other than to initiate the closure of our beloved family business because our insurers, to whom we have paid significant premiums every year for protection from unforeseen circumstances such as the ones we are experiencing today, have turned their backs on us. back to the most critical moment, “Century 21

co-CEO Raymond Gindi said.

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Many companies that file for bankruptcy use the process to get rid of debts and other liabilities and stay in business. JCPenney and Neiman intend to stay in business. Some, including most US airlines and General Motors (GM), came out of bankruptcy and continued to record record profits. But retail success stories are more difficult. Century 21 said that without the insurance money it believes was due, it makes sense to proceed directly to a liquidation.

“While retailers across the board have suffered greatly from Covid-19 … we are confident that if we had received a significant portion of the insurance proceeds, we would have been able to save thousands of jobs and weather the storm. “.

But Michael Barry, a spokesperson for the Insurance Information Institute’s business group, a business group in the industry, said that most business interruption insurance policies do not cover losses due to forced pandemic closures at the beginning of this one. year.

Typically there must be direct physical damage to a company’s place of business for these policies, also known as “business income policies,” to pay for a loss of earnings claim, he said.

“There are a number of companies nationwide that are suing their insurers, believing that a business interruption policy pays off when there is no direct physical harm,” he said, adding that the courts have supported the arguments. of the insurer. “To have the resources to pay off their legitimate claims, insurers must deny those where they are not obligated to pay.”

Such legitimate claims include business closed due to damage caused by protests or riots in some cities in the United States, or fire or wind damage from storms such as Hurricane Laura.

Barry estimates that only 35-40% of policies taken out for medium and large companies have business interruption insurance. But he said almost everyone has the same exclusions.

“Selling a policy that covers everything would be prohibitive to the point where no one would buy even one,” he said.

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