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Unpaid rent from retailers is upending turnaround efforts at CBL & Associates Properties Inc. and forcing the mall owner to skip an upcoming interest payment while it negotiates with creditors, Bloomberg News reported. CBL said in a filing that it withheld the $11.8 million due June 1 on its 5.25 percent unsecured notes, which mature in 2023, and invoked a 30-day grace period. Last week, the company drew $280 million from its line of credit, furloughed employees and halted redevelopment investments designed to reverse the decline facing many American malls. The move could put the rest of CBL’s debt in jeopardy, too. If the company doesn’t make good on the missing bond payment, holders of CBL’s senior secured credit facility and other notes due in 2024 and 2026 could demand immediate repayment, according to the filing. “Our priority during this time of uncertainty has been to preserve cash,” Chief Executive Officer Stephen D. Lebovitz said in a statement to investors last week. Chief Investment Officer Katie Reinsmidt declined to comment. Trends haven’t been in CBL’s favor, and it’s not just because of the wave of bankruptcies and store closings that predates the virus crisis. Analysts have long predicted a major shakeout in retail properties serving less affluent areas, which dominate CBL’s roster of more than 100 properties in 26 states. Its malls have been hard hit by the departures of anchor stores such as Sears, J.C. Penney, Macy’s and Forever 21.

One of the biggest questions surrounding the government’s efforts to help businesses struggling amid the coronavirus pandemic is whether the programs are constructed in a way that will prevent a wave of bankruptcies, keeping a short-term shock from turning into drawn-out economic pain, the New York Times reported. A new analysis from a group of Harvard University researchers suggests that the answer, should markets turn ugly again, might be no. Highly indebted public companies that employ millions of people are largely left out of the major direct relief options that Congress, the Federal Reserve and the Treasury have devised to help companies make it through the pandemic. Much of that is by design. Policymakers have prioritized getting help to businesses that came into the coronavirus crisis in good health, lowering the chances that taxpayers will wind up bailing out big companies that loaded up on risky debt. It could also help officials avoid the kind of angry criticism that surrounded 2008 bank and auto company rescues. But it leaves a slice of America’s companies fending for themselves amid the sharpest downturn since the Great Depression, putting them at greater risk of bankruptcy and their workers at greater risk of job loss. Publicly traded firms that employ about 8.1 million people — roughly 26 percent of all employment at tracked publicly traded companies — are all or mostly excluded from direct government relief, based on an analysis by Samuel Hanson, Jeremy Stein and Adi Sunderam of Harvard, along with Eric Zwick of the University of Chicago. Not all of those companies are likely to run into trouble, some have deep-pocketed investors behind them and others made poor financial choices that left them vulnerable to shock. But excluding a broad swath of employers could affect how successful the government is at preventing wide-scale bankruptcies if virus-related economic pain lingers, the researchers warned.

The outbreak of protests and riots during the weekend roiled retailers of all stripes, adding new stress to an industry that has already been upended by the coronavirus pandemic, the New York Times reported. But even as major chains boarded up stores and halted operations, they largely sought to convey empathy for protesters following the death of a black man, George Floyd, while in police custody, and did not condemn the damage to their businesses. Many large retailers would not discuss the extent of the damage or how many stores they had to close because of the unrest. “We can fix the damage to our stores," Nordstrom said on its website. "Windows and merchandise can be replaced. We continue to believe as strongly as ever that tremendous change is needed to address the issues facing black people in our country today.” Target, which is based in Minneapolis, where Floyd was killed, said over the weekend that about 200 stores would close or have shorter hours as a result of protests and looting. On Monday, the chain said that it was no longer sharing the number of affected stores “as the situation remains incredibly dynamic,” and emphasized its commitment to rebuilding and reopening damaged locations while supporting the Minneapolis and St. Paul communities. CVS said that more than 250 locations across 21 states faced varying levels of damage from protest activity and that 60 stores remained closed while repairs were made. Adidas, which also sells the Reebok brand, said that after some stores were damaged during protests, it decided to close all its retail stores in the United States “until further notice.” Nike and Apple also closed some stores.

Deutsche Bank AG , one of Neiman Marcus Group Ltd.’s lenders, says the bankrupt retailer has breached the terms of a $760 million loan, raising concerns about the company’s ability to restructure its business, the Wall Street Journal reported. The department-store chain reported that it overvalued the inventory backing the asset-based loan by $159 million, Deutsche said in a Friday court filing. The overvaluation means Neiman is in default, Deutsche said. Deutsche Bank said that it has “concerns” about allowing Neiman to continue to have access to its cash 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 holders of its term loan, 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 lenders of the $760 million asset-based loan — Neiman’s most senior debt — to use their cash to fund its business during the chapter 11 case.

As they reopen stores full of merchandise from March that no one will want in June, retailers are struggling to make room for summer goods trapped in overstuffed warehouses. With five big retailers having filed for bankruptcy in May, some of the industry’s survivors can’t get financial backing for their holiday season orders — prompting an urgent appeal to the Treasury Department and Federal Reserve for help, the Washington Post reported. Even though stores were closed for much of March and April, huge amounts of shoes, shirts, suits and swimwear poured into the U.S. from global supply chains that continued churning despite the pandemic. Retailers have to decide what to do with their leftover March goods and a glut of seasonal gear while they place their bets on what consumer spending will look like in six months. Without a Treasury or Fed guarantee of its routine financing, the retail industry could suffer “a commercial credit crisis that threatens to seize up our economy and stall the safe restart in its infancy," the American Apparel and Footwear Association will warn Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome H. Powell in a letter early this week. The trade group represents more than 1,000 name-brand companies, including manufacturers and retailers. Read more. 

In related news, many retailers and restaurants, already crippled by the coronavirus pandemic, are grappling with damage to their properties and new closures following protests sparked by the death of George Floyd that have sometimes turned violent, the Wall Street Journal reported. From Minneapolis, where Floyd died while handcuffed and in police custody, to California and Georgia, big and small retailers and restaurants have shut locations in anticipation of violence or are working to rebuild after destruction over the past week. Target Corp., Walmart Inc., Nike Inc. and small family businesses have collectively closed hundreds of locations or are recovering from looting and physical damage related to protests. Adidas said that it was temporarily closing all its U.S. stores, while Amazon.com Inc. said it had scaled back or adjusted delivery routes in a handful of cities to protect employees. Many executives and business owners expressed solidarity with protesters, who object to broader issues of racism and social justice. Read more. (Subscription required.) 

A new study predicted that nearly two-thirds of publicly traded restaurants are at risk of bankruptcy as the Covid-19 pandemic batters the industry, Bloomberg News reported. The concern is higher for small companies and restaurants that specialize in dine-in, consulting firm Aaron Allen & Associates said in an analysis. It identified Bloomin’ Brands Inc., Potbelly Corp. and Chili’s owner Brinker International Inc. among those at greater risk. “It’s really the full-service model that’s in the biggest danger,” principal Aaron Allen said. “Some of those that are in casual dining — a lot of those had already been bleeding cash, bleeding locations.” The study paints a bleak picture for an industry already upended by broad stay-at-home orders that led to sharp declines in restaurant sales. While Americans are starting to venture out again, the dining recovery may be slow with unemployment on the rise, cautious spending and also ongoing concerns about health and safety. That could create an opportunity for a lucky few companies at the top of the food chain, Allen said. Some of the largest firms entered the downturn with the financial wherewithal to survive and perhaps lead an industry consolidation. “The big will eat up the smaller and weaker competition.”

Party City Holdco Inc., already weighed down by debt before closing its stores in March in response to the coronavirus pandemic, is floating a debt-for-equity swap with bondholders that would erase millions in debt from its balance sheet, WSJ Pro Bankruptcy reported. The retail chain, based in Elmsford, N.Y., said on Friday that the proposed deal, which also includes a plan to raise $100 million in new capital, would cut about $450 million from its roughly $850 million debt load. Brad Weston, Party City’s chief executive, said the proposed deal would allow the chain to navigate the challenges facing retailers during the pandemic. Party City began reopening some of its more than 800 stores earlier this month. Under the deal, bondholders would receive a 19.9 percent equity stake in Party City plus $100 million in new 10% bonds due 2026 and $185 million in variable-rate bonds maturing in 2025. Party City said holders of 52 percent of bonds maturing in 2023 and 2026 have signed onto the deal. The company needs holders of 98 percent of bonds, or about $833 million of the debt outstanding, to agree to the proposal to complete the transaction.

The U.S. arm of the Belgian bakery chain Le Pain Quotidien won a bankruptcy judge’s approval to get out of leases for 59 restaurants shut down in the fallout from the coronavirus pandemic, Bloomberg News reported. Bankruptcy Judge John Dorsey acknowledged it was uncommon for a company in chapter 11 proceedings to seek immediate freedom from the leases at issue in the case. “The relief requested is unusual, but these are unusual times,” Dorsey said. The decision to seek protection from creditors under chapter 11 of the bankruptcy code allowed Le Pain Quotidien to shed debt and carry out a $3 million sale, pending court approval, to Aurify Brands LLC. That $3 million will serve as the chain’s bankruptcy financing.

Specialty’s Café and Bakery announced last week it was closing its 55 location for good after 33 years in business. On Wednesday the Pleasanton, Calif.-based bakery, known for hot, fresh cookies, officially filed for chapter 7 bankruptcy liquidation, the San Francisco Business Times reported. That means the company will sell off all its assets to pay off its creditors. According to bankruptcy filings, the company’s total assets are between zero and $50,000. That falls far short of what it owes — between $1 million and $10 million to nearly 1,000 creditors. Specialty’s Café and Bakery has decided to sell off what it can and close down for good.

The U.S. division of bakery chain Le Pain Quotidien filed for bankruptcy protection as pandemic restrictions continue to wreak havoc on fast-casual dining chains, WSJ Pro Bankruptcy reported. The Belgian company’s U.S. arm said in court papers that it hoped to avert a complete liquidation of its 98 Le Pain Quotidien locations with a proposed $3 million sale of the business to fast-casual restaurant operator Aurify Brands LLC. The sale to Aurify, which requires court approval, would allow for 35 Le Pain Quotidien restaurants to reopen and would allow some employees who had been terminated to regain their jobs, said Steven J. Fleming, the U.S. division’s chief restructuring officer, in a sworn declaration in the U.S. Bankruptcy Court in Wilmington, Del. Even before the Covid-19 pandemic kept customers from dining out, PQ New York Inc., which licenses the Le Pain Quotidien brand name from a Belgian division, was in financial trouble. More than half the company’s sales come from the New York City metro area, which is saturated with restaurants, Fleming said. He said that most of the dining industry’s recent growth has come from delivery and to-go sales, rather than Le Pain Quotidien’s casual dine-in concept. Fleming also blamed flagging investments in stores, a lagging digital platform and turnover within corporate management.