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Brookfield Property Partners agreed to throw in the towel on three struggling malls owned by the real-estate giant, with the possibility of more to come, as it goes private in an $6.5 billion deal, according to a new report, MarketWatch.com reported. The real-estate owner recently agreed to a “friendly foreclosure,” or when a borrower willingly hands back a property to creditors, on the Florence Mall in Kentucky, the Bayshore Call in Eureka, Calif. and the Pierre Bossier Mall in Bossier City, La., with a combined $174.6 million of senior mortgage debt, according KCP Research. The KCP team also pointed to negotiations between Brookfield Property BPY, and lenders on seven other embattled malls, saddled with $797.8 million of combined senior debt, about potentially friendly foreclosures. If that happens, Brookfield would be walking away from almost $1 billion of mall debt borrowed over the years in the commercial mortgage-backed securities (CMBS) market, a popular form of finance where Wall Street banks bundle loans on commercial properties into bonds, which are then sold to investors, often money managers, pension funds and the like. Even before the pandemic, some big-name investors were betting against debt on downtrodden malls, with the view to profit as cash flows at properties fell, borrowers defaulted and prices on mall-related securities plunged.

Hertz Global Holdings Inc. agreed to provide some value to equity holders when it leaves chapter 11, vindicating the individual traders who have insisted the company is worth something despite its bankruptcy filing. Hertz yesterday proposed in a chapter 11 exit plan that current stockholders receive warrants to purchase up to 4% of the restructured business, the first time the company has said it is worth enough to distribute some value to its owners, WSJ Pro Bankruptcy reported. The shareholder distribution would amount to a recovery of 60 to 70 cents per share, a “material return to equity,” Hertz lawyer Thomas Lauria said yesterday during a court hearing. If approved by the U.S. Bankruptcy Court in Wilmington, Del., that outcome would make Hertz a relative rarity in corporate bankruptcies, in which equity ranks behind debt and most often is wiped out. Hertz shares closed at $1.74 on Wednesday, down 8.4% on the day but up 36% year to date.

The owners of Old Country Buffet, Hometown Buffet and several other all-you-can eat restaurant chains are planning a quick bankruptcy sale for their assets and some of their leases, with hopes to sell them off by the summer, WSJ Pro Bankruptcy reported. San Antonio-based Fresh Acquisitions LLC and Buffets LLC along with several affiliates filed for chapter 11 protection Tuesday, marking the fourth trip through bankruptcy since 2008 for some of the sister chains. Together, the companies owe about $13.5 million in secured debt and more than $5.3 million in unsecured liabilities, according to court papers. The companies said that they filed for bankruptcy again after the Covid-19 pandemic and government-mandated shutdowns disrupted their restaurant operations and severely limited customer demand. Before the pandemic, the companies operated 90 restaurants in 27 states, including other brands such as Furr’s Fresh Buffet, Country Buffet, Ryan’s, Fire Mountain, and Tahoe Joe’s Famous Steakhouse. But the steep decline in sales at the restaurants from occupancy restrictions and the banning of family-style buffet dining forced the companies to close all of their all-you-can-eat locations. The only locations currently open are six Tahoe Joe’s restaurants in California, which had revenue of about $21 million a year before the pandemic, court papers show. Out of their remaining 71 leases, the companies plan to turn over 57 locations to their landlords to stop the continued payment of about $1 million in rent a month. The remaining 14 leases could potentially be transferred through the sale process so that a buyer could use them for future operations. If not, the leased locations could be handed back to the landlords.

A bidding war over Hertz Global Holdings Inc. intensified as previously outbid investors returned to the table with a counteroffer for the bankrupt car-rental company, backed by Apollo Global Management Inc. and existing Hertz shareholders, WSJ Pro Bankruptcy reported. Investment firms Knighthead Capital Management LLC and Certares Management LLC, which previously offered to buy Hertz out of chapter 11 only to be eclipsed by a competing investor group, returned with a sweetened bid late Thursday that values Hertz at $6.2 billion. Apollo has agreed to supply up to $2.5 billion in preferred equity financing for the proposed restructuring, which unlike the prior offers would pay off the rental-car company’s funded debt in full. The revised bid challenges a restructuring offer that Hertz accepted earlier this month, backed by Centerbridge Partners LP, Warburg Pincus LLC and Dundon Capital Partners LLC and valuing the company at about $5.5 billion. The competing proposal presents a choice for Hertz, which is racing to exit from bankruptcy by the end of June and has already put the restructuring terms it selected earlier this month up for approval from the U.S. Bankruptcy Court in Wilmington, Del.

Department stores, once a middle-class mainstay of convenience and indulgence, had been spiraling downward long before the pandemic turbocharged online shopping and helped tip a number of big-name retailers into bankruptcy. Nearly 200 department stores have disappeared in the past year alone, and another 800 — or about half the country’s remaining mall-based locations — are expected to shutter by the end of 2025, according to commercial real estate firm Green Street Advisors, the Washington Post reported. Those closures, analysts say, will have a cascading effect on American shopping malls, which already are battling record-high vacancy rates and precipitous drops in foot traffic, as well as on the commercial real estate market and the broader economy. The pandemic set off an economic chain reaction that rippled through the country’s department store chains, forcing several into chapter 11 proceedings. Neiman Marcus, Stage Stores and J.C. Penney filed for bankruptcy last May, followed by Lord & Taylor and, most recently, Belk in February. Even companies on relatively stable footing, like Macy’s, are shuttering dozens of stores as they try to move away from traditional shopping malls. Overall sales at department stores plunged more than 40 percent at the beginning of the pandemic and have yet to make up for lost ground, according to Commerce Department data, as Americans do more of their shopping online and gravitate to specialty brands and discount chains. 

Despite a rebound in the U.S. travel industry, bankrupt Hertz Global Holdings Inc. said it is still insolvent and that its stockholders will come away empty-handed in its proposed reorganization, WSJ Pro Bankruptcy reported. The rental car provider made the statement Thursday in a court filing that rebuts the claims of a committee of hedge-fund shareholders that Hertz equity is in the money. Hertz today is scheduled to appear in the U.S. Bankruptcy Court in Wilmington, Del., to seek approval of a blueprint for a chapter 11 reorganization that began last year. Such disclosure statements are required to include sufficient information to allow creditors of bankrupt companies to make informed decisions on whether to vote for a proposed restructuring. Hertz, which hopes to exit bankruptcy by June as the travel industry rebounds from a downturn brought on by the COVID-19 pandemic, said a valuation analysis expected to be filed publicly will show the company is insolvent, with insufficient value to cover its debt and no surplus left over for stockholders. The company also said it has conducted a competitive process seeking bids for control of the reorganized business. Neither of the two serious proposals that have surfaced have yielded enough proceeds for shareholders to receive a recovery, Hertz said.

Luckin Coffee Inc. said it has secured a $260 million investment from two Chinese private-equity firms, funding that the troubled coffee chain operator said would support its debt restructuring and help pay a U.S. regulatory penalty over allegations it fabricated sales to make its growth appear stronger, WSJ Pro Bankruptcy reported. The investment is led by Centurium Capital, a Luckin shareholder, which has agreed to invest $240 million in senior convertible preferred shares, Luckin said. Fellow shareholder Joy Capital has agreed to invest $10 million in senior preferred shares. The private-equity firms also have an option to increase their investment by $150 million. The transaction is subject to customary closing conditions, including completion of a planned restructuring of Luckin’s $460 million senior secured notes through a court-supervised scheme of arrangement in the Cayman Islands, similar to chapter 11 bankruptcy in the U.S. The investment will help pay off a $180 million settlement it struck last year to resolve accounting fraud charges brought by the U.S. Securities and Exchange Commission. The SEC said in December that Luckin fabricated more than $300 million in retail sales from at lea st April 2019 through January 2020.