How Bankruptcy Store Closing are Affecting Malls

: Reese Baker & Associates

  Filed under: News

For those unaware of the matter, retail stores and restaurants in the US have had a rough go over the past 24-36 months, keeping bankruptcy attorneys quite busy. Some absolute behemoths of industry such as Claire’s, Toys R’ US, Pac Sun, Aeropostale, Wet Seal, and Bon Ton have all filed bankruptcy since 2015, in a retail bankruptcy epidemic that some journalists have referred to as “Retail Apocalypse”. What many of these stores have in common is their typical location inside a shopping mall, leaving us to wonder, “Will malls go away in America?” While US shopping malls going the way of the dinosaur are not likely, it does stand to reason that mall owners have a tough road ahead.

First Quarter Retail Property Report

Numbers have been steadily pouring out to investors via investor conference calls this month. On the mind of many individuals who invest in real estate investment trusts are how property companies can stay profitable without rent from companies such as Gymboree, The Walking Company, and A’Gaci. CBL, a REIT that includes nearly 63 malls in its property portfolio estimates that losing Bon-Ton stores, which filed for bankruptcy protection in early 2018,  from its portfolio will cost the company as much as $90 million. Despite the struggle for smaller REITs, larger, higher-end real estate property companies are experiencing strong rents and are optimistic that they’ll be able to maintain occupancy rates.

Companies that Could File Bankruptcy Soon

With retail defaults hitting an all-time high in just the first quarter of 2018, investors and analysts alike are looking hard at the numbers and paying special attention to players in the retail market. Some rating companies have pegged Sears, J.Crew, Hot Topic, and Neiman Marcus, among others, as being at strong Chapter 11 bankruptcy risk this year. With roughly 90 million square feet of retail space currently on the market, the surplus is on pace to break the record of 105 million from 2017. Retail stores typically located in malls aren’t the only stores at risk this year either. The holding companies for Academy Sports, Pet Smart, Guitar Center, and The Fresh Market are all under close watch as we progress towards the middle of 2018.

Texas Business Bankruptcy

If you are operating a struggling business in Texas, bankruptcy could be the answer to your business debt problems. Depending on several factors, you may be able to use the US Bankruptcy Code to either liquidate your business while discharging any debt not personally guaranteed by the owner(s), or utilize Chapter 11 bankruptcy to reorganize your company’s debt in order to continue operating while also strengthening the balance sheet. Contact a Houston business bankruptcy attorney skilled in Chapter 11 filing to find out how to get started.