Two bankrupt retailers, an ocean apart, show how important it is to get quick access to fresh funds after filing for bankruptcy. In January, Kmart, a discount chain, became the largest retailer ever to file for Chapter 11 bankruptcy in America. Four months earlier, Mycal, a supermarket chain, had become Japan's biggest retail bankruptcy. Both had racked up a big pile of debt―around $11 billion at Kmart and $13 billion at Mycal. It was suppliers demanding cash-on-delivery that tipped them over the edge. Yet the similarities end there. As it filed for bankruptcy, Kmart secured $2 billion of debtor-in-possession (DIP) loans, offered to companies under court protection and used mainly as working capital. Suppliers were back within days. By contrast, Mycal was able to raise only ￥50 billion ($390m) of similar loans in the first two months after its collapse. More than half of its suppliers suspended delivery. Sales at Mycal stores plunged by one-third after it filed for bankruptcy, compared with a 10.8% drop at Kmart. It was only when Aeon, Japan's second-largest supermarket chain, took Mycal under its wing that its suppliers came back.
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