CBL & Associates Properties Inc., one of the country’s largest mall owners, plans to file for bankruptcy by Oct. 1 after the coronavirus pandemic forced almost all its properties to shut down temporarily, disrupting rent collection, WSJ Pro Bankruptcy reported. Founded during a building boom in the 1970s, CBL owns and operates about 90 second-tier shopping centers around the U.S., including locations in smaller and less wealthy cities. The company said yesterday that it has reached a deal on a debt-for-equity swap with bondholders that would erase $900 million in debt and at least $600 million in other obligations. The mall owner’s rents slowed to a trickle since the World Health Organization in March declared COVID-19 to be a pandemic. Some of CBL’s biggest tenants, such as J.C. Penney Co., have filed for bankruptcy as mall closures dragged on, a process that makes it easier for those retailers to close stores permanently and walk away from leases. Penney has said that it would close eight of its 47 stores at CBL properties. While those eight stores bring in only $2.1 million in annual rents, CBL risks losing other tenants in those shopping centers with leases tied to the presence of large anchor tenants like Penney. A number of other CBL tenants have filed for bankruptcy since the pandemic, including GNC Holdings Inc., Aldo Group Inc. and RTW Retailwinds Inc., the parent company of New York & Co. Other tenants such as Macy’s Inc. have recently said they would permanently close certain stores. Read more.
Occupancy issues are at the heart of many significant retail cases, as detailed in the ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available at the ABI Store.
