Bankrupt retailers are significantly more likely to be liquidated than distressed companies in other sectors, Fitch Ratings reported Dec. 19, citing data from a new report.

In an analysis of 46 retailers that entered bankruptcy since 2003, 46% resulted in liquidations, compared to Fitch's U.S. corporatewide average of 14%.

"The reality is that a significant share of bankrupt retailers liquidated because they lacked a reason to exist," said Sharon Bonelli, senior director at Fitch.

The rating agency also pointed to the rising popularity of discount and online or multiple-channel models, as well as shifts in consumer spending toward services over goods. Those that did survive bankruptcy either reorganized as independent operating chains or sold assets to new owners that continue to run the business.

Although Fitch identified Neiman Marcus Group Inc. as the largest retailer by debt amount in its list of top loans of concern and top bonds of concern, the agency said most of the names are smaller retailers.

Unsecured debt recoveries have remained bleak, despite strong secured debt recoveries for first-lien claim-holders, the agency said. Fitch attributed the below-average recovery rate for unsecured claims to constrained exit multiples, high secured leverage relative to company value, and large lease rejection and trade vendor claims that ranked equally to unsecured debt in priority for recovery distributions.

However, Fitch senior director David Silverman said the recent retail liquidations have positively affected survivors as store closings have lessened competition.