(RTTNews) - Mall operator CBL filed for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.
Mall owners have come under pressure amid the ongoing coronavirus pandemic, and tenants such as retailers and restaurants are not able to pay rents.
The company will implement a noteholder-supported plan to recapitalize the company, including restructuring portions of its debt.
Through this process, all day-to-day operations and business of the Company's wholly owned, joint venture and third-party managed shopping centers will continue as normal. CBL's customers, tenants and partners can expect business as usual at all of CBL's owned and managed properties.
The company had entered into a Restructuring Support Agreement (RSA) on August 18 with certain beneficial owners and/or investment advisors or managers of discretionary funds, accounts, or other entities, representing over 62 percent of the principal amount of the Operating Partnership's noteholders.
CBL's management intends to trim total debt and preferred obligations by approximately $1.5 billion, extending debt maturities and increasing liquidity while maintaining operational consistency.
This move by CBL comes close just a day after Pennsylvania Real Estate Investment Trust filed for Chapter 11 bankruptcy protection on Sunday to execute a similar pre-arranged restructuring of balance sheet. Pennsylvania REIT is the largest mall owner in Philadelphia.
More than a dozen retailers and restaurants have already filed for bankruptcy protection since the onset of the pandemic.
Retailer J.C. Penney, one of the largest tenants of CBL, filed for bankruptcy protection in mid-May, citing the impact of unprecedented COVID-19 pandemic on its business. It is expected to come out of it ahead of the busy December 2020 holiday season after being acquired by Brookfield Asset Management, Inc. and mall operator Simon Property Group, Inc.
Majority of retailers across the country have been forced to close stores for months due to the lockdown restrictions amidst the ongoing pandemic that hurt their sales. This is all the more seen at retailers and restaurants operating in malls as the rentals are very high.
Even before the pandemic outbreak, slowing foot traffic amid the ever-increasing online competition from industry majors and the changing consumer habits had led to many retailers shuttering stores and seeking bankruptcy protection.
Some other retailers such as Neiman Marcus Group Inc., J.Crew Group Inc. and Stage Stores Inc. also filed for bankruptcy protection. Others who followed suit include America's oldest apparel retailer Brooks Brothers and the oldest US department store Lord & Taylor. Ascena retail group, Inc., which owns Ann Taylor, LOFT, Lane Bryant, Stein Mart and Justice brands, also had filed for Chapter 11 bankruptcy.
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