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Empty space in regional shopping malls reached a six-year high in the first quarter, adding further stress to regions being hit by a retail earthquake that is shaking up the job market across the U.S, the Wall Street Journal reported. The vacancy rate in big U.S. malls increased to 8.4 percent in the first quarter of 2018, up from 8.3 percent in the fourth quarter and the highest since the fourth quarter of 2012, according to real-estate data firm Reis Inc., which studies 77 metropolitan areas. Meanwhile, neighborhood and community shopping centers in 41 of the 77 areas experienced an increase in vacancy during the 12 months ending on March 31. Reis reported that retailers occupied 453,000 more square feet of shopping center space at the end of the first quarter than the fourth quarter of 2017, but that amount of “absorption” was the lowest for any quarter in more than five years. The completion of 712,000 square feet of new shopping center space also was “much lower” than average, Reis said. Read more. (Subscription required.) 

Occupancy issues are at the heart of many significant retail cases, as detailed in the forthcoming ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available for pre-order at the ABI Store. 

Bon-Ton Stores Inc.’s creditors are trying to hold a bank accountable for a paperwork mistake that could cost bondholders millions of dollars, WSJ Pro Bankruptcy reported. In a lawsuit filed on Thursday, Bon-Ton’s unsecured creditors' committee sued Wells Fargo NA, the trustee for its second-lien bonds, for “defects in its liens securing” the bonds due to mishaps with filing paperwork at the right time. Bon-Ton issued $350 million in second lien bonds to investors in 2013. Wells Fargo, the original indenture trustee for the bonds, filed paperwork perfecting the bondholders’ liens on Bon-Ton’s assets and property. However, the trustee didn’t file the paperwork to continue the liens, the lawsuit claims, until earlier this year, just weeks before Bon-Ton’s bankruptcy filing. Since those filings fell within the 90-day preference period under bankruptcy law, the creditors say the bondholders’ claim should be disallowed. Wilmington Savings Fund Society succeeded Wells as the trustee and collateral agent and is also named as a defendant in the lawsuit. WSFS contends that its liens are valid and not avoidable, according to the lawsuit. Read more. 

In related news, Bon-Ton Stores Inc. is in active discussions with a bidder to acquire the company, and had received approval from lenders to extend the deadline for submitting bids for the chain, it said on Friday. The company said that it had received approval to extend the deadline for submitting qualified bids by two days to April 4. Read more. 

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Las Vegas restaurateur Billy Richardson has acquired the Elephant Bar chain out of bankruptcy, the Las Vegas Review-Journal reported. Richardson, founder of Gen3 Hospitality, operates The Barrymore, Flour & Barley, Haute Doggery and other restaurants. His latest addition has a location at The District at Green Valley Ranch in Henderson, along with one in New Mexico and five in California. Elephant Bar filed for chapter 11 protection in October 2017 in U.S. Bankruptcy Court in Las Vegas. The chain also went bankrupt in 2014, albeit under different owners, and its restaurant tally shrank drastically in recent years. Richardson completed the purchase about a month ago. His group did not disclose the terms.

Retail billionaire Mike Ashley’s Sports Direct International Plc is among bidders for certain Toys “R” Us Inc. stores in the U.K., Bloomberg News reported. The group has submitted an offer for some properties backing a 2013 securitization known as Debussy DTC. Private equity firm TPG is also competing for some assets backing the Debussy debt, while Hayfin Capital Management LLP plans to submit a bid or provide financing to potential buyers. The 263 million-pound ($370 million) Debussy bonds, which are backed by a loan financing 31 properties in the U.K., came under stress late last year as the toy seller tried to restructure its British operations after filing for bankruptcy protection in the U.S. The securitized loan is now in the hands of administrators, and noteholders have appointed real estate firm Morgan Williams to sell the properties to recover money for the bonds.

Southeastern Grocers LLC, the owner of the Bi-Lo and Winn-Dixie supermarket chains, won bankruptcy court approval Wednesday for procedures to close or sell about 100 stores and for a key vendor to provide easier credit terms as part of the grocer’s chapter 11 reorganization, WSJ Pro Bankruptcy reported. Bankruptcy Judge Mary Walrath signed off on the requests as part of a prepackaged bankruptcy filed on Tuesday by the Jacksonville, Fla.-based retailer, which faced maturing debt later this year. Southeastern’s reorganization, if approved, will hand ownership to its creditors and reduce its debt by about $500 million, to roughly $700 million. Southeastern said earlier this month it reached an agreement with a creditor group holding 80 percent of its outstanding 8.625 percent/9.375 percent unsecured pay-in-kind toggle notes due September 2018. The unsecured noteholders will receive the equity in the restructured company in exchange for canceling their $522 million in claims for the notes, a court filing said. Read more. 

Occupancy issues are at the heart of many significant retail cases, as detailed in the forthcoming ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available for pre-order at the ABI Store. https://store.abi.org/retail-and-office-bankruptcy-landlord-tenant-righ…

The liquidation of Toys “R” Us Inc. has stoked fears about how the U.S. toy industry will absorb the blow. But the shutdown of the company’s sister chain, Babies “R” Us, is setting off its own wave of disruption in the market for infant products, Bloomberg News reported. As the company begins holding closeout sales and planning store closures, other retailers are scrambling to scoop up customers and capture their registries — a potentially lucrative prize. Buy Buy Baby Inc., Target Corp. and Amazon.com Inc. stand to benefit from the shake-up. Until recently, Babies “R” Us had hoped to use its registry business as the linchpin of a comeback. The idea was to spur sales of big-ticket items, such as furniture, rather than lower-margin fare like diapers. As of last year, the company had enrolled 23 million customers in the service. But after the bankruptcy and liquidation filing of its parent company, Babies “R” Us told customers last week that it would no longer accept new registries. And people who are already registered with the chain are now racing to move their lists elsewhere. Read more.

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Boston Store parent company The Bon-Ton Stores Inc. will shell out millions of dollars to lawyers and consulting firms for services rendered during the company's first month of bankruptcy proceedings, the Milwaukee Business Journal reported. Court filings show that department store chain operator Bon-Ton is requesting approval from the U.S. Bankruptcy Court for the District of Delaware to compensate those law firms and companies that have consulted with or represented the retailer during the first month of its chapter 11 bankruptcy case. The Milwaukee and York, Pa.-based company filed for bankruptcy on Feb. 4 and has utilized services from firms such as New York-based PJT Partners and AlixPartners LLP, among other companies. Bon-Ton's largest invoice for February is from PJT Partners, which has acted as the company's investment banker, according to court records. PJT is billing Bon-Ton $2.13 million — which includes a capital raising fee — for the first month for services such as: providing strategic advice; assisting Bon-Ton in identifying potential buyers; assisting potential buyers with due diligence on Bon-Ton; reviewing cash reporting packages and liquidity forecasts, among other tasks. Read more.

Don't miss the special live taping of "Eye on Bankruptcy" at ABI's Annual Spring Meeting as experts discuss the next wave in retail cases. Register before Friday before rates go up!

Brookfield Property Partners LP and GGP Inc. have reached an agreement for Brookfield to buy the remaining shares of the mall owner it doesn’t already own, a deal that would create one of the world’s largest retail real-estate companies, the Wall Street Journal reported. The deal is a sweetened version of the offer that Brookfield made for the roughly 66 percent stake in November. Brookfield currently owns about 34 percent of the company, formerly known as General Growth Properties. Under the agreement announced Monday, and unanimously endorsed by a special committee of GGP’s board, GGP investors could choose either $23.50 a share in cash or stock in either Brookfield Property or a new real-estate investment trust being formed. The offer is subject to proration based on aggregate cash consideration of $9.25 billion. The Brookfield deal marks the latest chapter in the saga of GGP, which went through a high-profile bankruptcy reorganization after the 2008 financial crash. It comes as the retail real-estate world is being rocked by investor unease caused by the growth of online shopping.

The head of the company that created Bratz dolls and Little Tikes is putting $100 million toward a long-shot bid to save Toys “R” Us, Bloomberg News reported. MGA Entertainment Inc. Chief Executive Officer Isaac Larian is aiming to buy the toy-store company’s assets as part of an investment group that includes a crowd-funding campaign. He said it’s his own money on the line, and MGA isn’t part of the bid. If he’s successful, the executive expects that 200 to 400 U.S. stores can be saved. “There is a lot of value in the Toys ‘R’ Us name, a lot of value in all the assets that they have,” Larian said. “If Toys ‘R’ Us is not here, I think the toy business as a whole will have a devastating year -- this year and the following year.” Larian’s push to help the toy retailer survive liquidation includes a bid that a group of investors made for the Canadian assets of Toys “R” Us last week. He and other investors also launched a campaign on GoFundMe for the purchase of U.S. assets from the company. Their goal is to raise $1 billion by Memorial Day. Read more.

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Explore various strategies on how the tough times ahead for clients in the newspaper, brick-and-mortar retail or coal industries can be addressed in a bankruptcy, whether through a restructuring or a wind-down and liquidation of the company. Make sure to attend the "Obsolescence as a Catalyst" session at the Annual Spring Meeting. 

Toys “R” Us Inc. received bankruptcy court approval Thursday to wind down its U.S. business and close the remainder of its more than 700 stores, WSJ Pro Bankruptcy reported. The liquidation sales are expected to begin as early as Friday throughout the U.S. The closure of the iconic toy stores will leave up to 33,000 Americans without jobs. Toys “R” Us is still holding out hope that some of its U.S. stores will survive, however, according to court papers. Toys “R” Us also won approval from Judge Keith Phillips of the U.S. Bankruptcy Court in Richmond, Va., to put its Canadian business up for sale. The Canadian sale process comes with the option to add on 200 U.S. stores — the best-performing side-by-side Toys “R” Us and Babies “R” Us stores — in hopes of keeping the American chain alive. Last week, Toys “R” Us announced it would close its entire U.S. chain after hopes of reorganizing the company’s hefty debt load and surviving the bankruptcy filing were diminished after disappointing holiday sales. Read more.

In related news, charles Lazarus, the founder and original CEO of Toys “R” Us, died yesterday at the age of 94, FoxBusiness.com reported. Lazarus opened a children’s furniture store in 1948 and founded the original incarnation of Toys “R” Us in 1957. He served as the chain’s CEO until 1994. Read more. 

Occupancy issues are at the heart of many significant retail cases, as detailed in the forthcoming ABI publication Retail and Office Bankruptcy: Landlord/Tenant Rights, available for pre-order at the ABI Store. 

Explore various strategies on how the tough times ahead for clients in the newspaper, brick-and-mortar retail or coal industries can be addressed in a bankruptcy, whether through a restructuring or a wind-down and liquidation of the company. Make sure to attend the "Obsolescence as a Catalyst" session at the Annual Spring Meeting.