%1

Simon Property Group, the country’s largest mall owner, filed a lawsuit against Gap Inc. on Tuesday over unpaid rent and other charges it says amount to $66 million, the Wall Street Journal reported. In the filing, Simon Property said that the retailer has withheld rent for April, May and June. The landlord is seeking to be paid rent for those months, as well as attorney fees and other charges, according to the lawsuit. “The requirement that The Gap Entities timely pay rent due under the leases has not been excused,” said the complaint, which was filed in the Superior Court of the state of Delaware. Gap didn’t comment on the lawsuit directly, but said it is committed to working with landlords on “mutually agreeable solutions and fair rent terms.” “It’s important to note the profound effect that Covid has had on shopping centers as well, leaving them closed to us and our customers for months,” said Mark Daniel Snyder, communications manager at Gap. Gap said in April that its stores are closed because of the coronavirus pandemic and it had stopped paying rent because of insufficient cash flow. The San Francisco-based retailer, which owns brands such as Old Navy, Banana Republic and Athleta, added at that time that it was looking to renegotiate leases with its landlords.

The British unit of Victoria’s Secret owner L Brands Inc. filed for protection from creditors Friday as it grapples with disruption wreaked by the coronavirus pandemic, in a move that could result in the sale of the business, the Wall Street Journal reported. L Brands is invoking a tool in the U.K. called a “light-touch administration” that, like filing for bankruptcy, creates a moratorium on claims for unpaid debts. But unlike in a bankruptcy filing, it allows management to keep running the business with the consent of administrators. The company’s U.K. arm employs over 800 people and operates 25 stores under the Victoria’s Secret and Pink brands, which have been shut for weeks because of the pandemic. The administration process excludes its online business, which will continue to trade.

Aurelius Capital Management LP is competing with rival lenders to finance J.C. Penney Co. ’s restructuring strategy, accusing them of “predatory lending” and offering to bankroll potential litigation against them, WSJ Pro Bankruptcy reported. The dispute concerns which investors will finance the company’s turnaround efforts, pitting a group of creditors including Aurelius against a competing faction led by H/2 Capital Partners LLC. Penney, which filed for bankruptcy last month, has proposed tapping H/2, Sixth Street Partners and other top-ranking lenders for a $900 million financing package, half of which would provide fresh capital while the other half pays down debt. Shortly before filing for chapter 11, the company paid $45 million to these lenders for their commitment to finance the bankruptcy and is scheduled to submit the loan proposal for final approval on Thursday to the U.S. Bankruptcy Court in Houston. A rival group with claims crossing over senior and junior debt tranches includes Aurelius. It said on Tuesday it had proposed its own $450 million package with “dramatically lower overall costs” and more flexibility for Penney to try to salvage the business and avert a liquidation of its nearly 850 department stores.

RTW Retailwinds Inc., the owner of women’s apparel seller New York & Co., could be the next struggling retailer to file for bankruptcy protection as the Covid-19 pandemic batters mall-based stores, Bloomberg News reported. The New York-based company said in a filing yesterday that there’s a “substantial doubt” about its ability to continue as a going concern, calling bankruptcy “probable.” It also said that it would need more time before issuing its annual report. The company was having trouble even before the coronavirus disruption. In December, RTW said it would close up to 30 stores and reevaluate its store network as its New York & Co. locations struggled to attract shoppers. It also said that it would look into subleasing office space.

AMC Entertainment Holdings Inc. investor Silver Lake Group LLC could get first dibs on the movie-theater chain’s assets under a proposed debt swap as the company battles to survive the coronavirus pandemic, WSJ Pro Bankruptcy reported. AMC, the world’s largest cinema operator, has shut down its more than 1,000 theaters due to the pandemic and said Wednesday it might not continue as a going concern if the temporary closures go on for longer than expected or if it can’t raise additional cash. The Leawood, Kan.-based company also launched a bond exchange proposal to entice creditors to slash debt and push out maturities. AMC would swap roughly $2.3 billion of junior debt at between 51 and 53 cents on the dollar into new securities backed by a second-priority claim on its assets, including its brand name, trademarks, property and business operations. The proposed transaction would cut AMC’s debt by slightly more than $1 billion. But the deal depends on private-equity firm Silver Lake exchanging $600 million of unsecured convertible bonds into a new security with a first lien on assets.

Nearly half of commercial retail rents were not paid in May, the Washington Post reported. Companies as big as Starbucks say that the financial devastation from the shutdown has left them unable to pay their full property bills on time. Some companies warn they will not be able to pay rent for months. The situation is especially dire for owners of hotels and malls. Such retailers as Bed Bath & Beyond, Famous Footwear, H&M, and the Gap, movie theaters AMC and Regal and gyms like 24 Hour Fitness stopped paying rent entirely in May, according to Datex Property Solutions. Starbucks paid May rent but also sent a letter to landlords requesting landlords to make concessions starting June 1 and continuing for 12 months. Overall, Datex found that 58.6 percent of retail rents were paid in May. Office and warehouse tenants are still paying rent for now, but there remain concerns about whether tenants will renew leases as working from home gains in popularity.

LVMH’s board met this week to discuss the fallout from the coronavirus crisis on its $16.2 billion purchase of U.S. jeweller Tiffany, the luxury goods group said today, opening the door to a possible attempt to review the deal terms, Reuters reported. LVMH, run by France’s richest man, Bernard Arnault, agreed to buy Tiffany in November, before the retail business was hammered by the pandemic. Arnault is now exploring ways to reopen negotiations and potentially pressure Tiffany to lower the agreed deal price of $135 per share, including by examining its compliance with financial covenants. The French conglomerate, behind brands such as Louis Vuitton, said that its board had this week discussed the potential impact of the pandemic “on the results and perspectives of Tiffany & Co with respect to the agreement that links the two groups.” LVMH gave no further details, beyond specifying that it would not seek to buy shares in the U.S. jeweller on the open market, which could have been one way to buy Tiffany at a lower price. Tiffany will release quarterly earnings on June 9, which had originally been scheduled for this Friday. Tiffany shares closed at $114 on Wednesday. It was not clear what strategy LVMH might pursue to secure a price cut and whether it would see it through, sources have said, but one way into a renegotiation would be if Tiffany breached its financial covenants under the deal. LVMH has not asked Tiffany to reopen talks.

Gold’s Gym International Inc. is putting its gyms on the bankruptcy auction block, with bids starting at about $80 million, WSJ Pro Bankruptcy reported. The company, which filed for bankruptcy last month after closing its gyms because of the coronavirus pandemic, had planned to sell its assets to TRT Holdings Inc., a holding company led by billionaire Robert Rowling that acquired a majority stake in Gold’s Gym in 2004. The proposed sale to TRT, which would be completed through a chapter 11 plan and not an auction, would have paid off the chain’s $51.3 million senior debt, its $20 million bankruptcy loan and transaction costs of up to $10 million. But the gym chain’s creditors asked for a “market check” after some interested parties came forward and expressed interest in making better offers for the assets. TRT will now serve as a stalking horse, or lead bidder, for the chain’s assets at a bankruptcy auction, with bids starting at “no less than” $80 million, according to papers filed Monday in U.S. Bankruptcy Court in Dallas.

GNC Holdings Inc. and its senior lenders are negotiating a bankruptcy loan just days before a crucial debt deadline for the vitamin retailer, Bloomberg News reported. The debtor-in-possession loan is being discussed as GNC approaches a potential early repayment of about $60 million to its asset-based lending facility on June 15. Lenders can force the payment if liquidity falls below a set level on that date, company filings show. No formal decisions have been made, but GNC is in active talks with its bank debt and loan holders about an extension or waiver. GNC has withheld rent payments to preserve cash as the pressure of the pandemic continues. The bankruptcy loan would keep the Pittsburgh-based company running while it works out a plan to turn around the business and rework its debts, which totaled $895 million at the end of the first quarter.

Neiman Marcus Group Inc. denied violating the terms of a loan from top-ranking lender Deutsche Bank AG, saying it has $100 million more cash on hand than projected because sales have been better than expected, WSJ Pro Bankruptcy reported. Deutsche Bank, in court papers filed Friday, said the bankrupt retailer breached the terms of a $760 million loan by overvaluing the inventory backing the asset-based loan. Neiman said in response that generating more cash than expected has, in turn, lowered the level of inventories backing the Deutsche Bank loan. The company said it would use cash to replenish inventory back to levels required under the loan. Deutsche Bank on Friday raised concerns about allowing Neiman to continue to have access to the loan financing unless the luxury retailer replenishes a cash collateral reserve meant to protect the bank and other lenders against losses, according to the bank’s court filings. Neiman Marcus filed for bankruptcy in early May with a $675 million bankruptcy loan from large creditors, including Pacific Investment Management Co., Davidson Kempner Capital Management LP and Sixth Street Partners LLC. The company, however, is also relying on a deal with Deutsche Bank and other asset-backed lenders — holders of Neiman’s most senior debt — to use their cash to fund its business during the chapter 11 case.