• Market Crumbs

Mall Owner Bankruptcies Come In Pairs


Image via Igor Karimov on Unsplash

The coronavirus pandemic has taken its toll on countless companies as bankruptcies have spiked so far this year. Both large U.S. corporations and retailers are filing for bankruptcy at a record pace so far this year.


According to New Generation Research, 45 companies that each have more than $1 billion in assets have filed for Chapter 11 bankruptcy through August 17, putting this year on pace to surpass the record reached in 2009. On the retail front, 18 major retailers filed for Chapter 11 bankruptcy in the first half of this year, putting 2010's record 48 bankruptcy filings among retailers in reach, according to professional-services firm BDO USA LLP.


"We are in the first innings of this bankruptcy cycle. It will spread far across industries as we get deeper into the crisis," New Generation Research COO Ben Schlafman told the Financial Times. "It's going to be a bumpy ride."


With many brick-and-mortar retailers struggling to survive the pandemic, Sunday saw two U.S. mall operatorsCBL and Pennsylvania Real Estate Investment Trust, join the ranks of those who have chosen to file for Chapter 11 bankruptcy protection amid the pandemic.


Pennsylvania Real Estate Investment Trust, which is the largest mall owner in Philadelphia, filed a petition to execute its prepackaged financial restructuring plan. PREIT has secured $150 million in new funds from its lenders which will be used to recapitalize the business and extend the company's debt maturity.


"Today's announcement has no impact on our operations – our employees, tenants, vendors and the communities we serve –and we remain committed to continuing to deliver top-tier experiences and improving our portfolio," PREIT CEO Joseph F. Coradino said in a statement.


CBL, which owns 107 properties across 26 states, filed for Chapter 11 bankruptcy protection to recapitalize the company and restructure portions of its debt. CBL has fared worse than its competitor Simon Property Group, which is the largest mall operator in the U.S. and has turned to acquiring bankrupt retailers such as Lucky Brand, Brooks Brothers, Forever 21 and J.C. Penney.


"With an aggregate of approximately $1.5 billion in unsecured debt and preferred obligations eliminated and a significant increase to net cash flow, upon emergence, CBL will be in a better position to execute on our strategies and move forward as a stable and profitable business," CBL CEO Stephen Lebovitz said in a statement.


It will now be interesting to see if Simon's strategy of buying bankrupt retailers can pay off or if it will end up causing them to join the ranks of CBL and PREIT.


Leftover Crumbs

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  • Walmart ends robotics contract. Walmart has ended its contract with robotics company Bossa Nova Robotics after finding humans can do the same amount of work, according to The Wall Street Journal. More than 500 Bossa Nova Robotics robots were spread across more than 4,700 Walmart stores scanning items on shelves for inventory. Walmart U.S. CEO John Furner was reportedly concerned about customers' reactions to the robots in its stores.

  • TikTok signs deal with Sony Music. TikTok has agreed to a new music licensing agreement with Sony Music Entertainment to replace the short-term licensing deal that was agreed to in April. The new deal will see TikTok pay Sony, which is the world's second-largest label, a sizable increase from the previous deal for the rights. "TikTok is a leader in this space and we are pleased to be partnering with them to drive music discovery, expand opportunities for creativity and support artist careers," Sony Music Entertainment president of global digital business and U.S. sales Dennis Kooker said.

  • Apple has "One More Thing." Apple announced a "One More Thing" event scheduled for November 10th at its headquarters. Apple is expected to unveil ARM-based Mac computers using chips it designed instead of Intel processors, which Apple has used since 2005. Apple announced the switch earlier this year, promising new Macs with the chips by the end of 2020. Apple cites better performance and lower power consumption as to why it made the switch from Intel.

  • Alibaba nears stake in Farfetch. Alibaba is reportedly in advanced discussions to invest close to $300 million in online luxury fashion retailer Farfetch, causing shares of Farfetch to jump more than 15% in London. As part of the deal, Farfetch is also reportedly discussing forming a Chinese joint venture with Alibaba, while Cartier owner Richemont is also considering investing in Farfetch as a result of its relationship with Alibaba. Farfetch's existing investors include Alibaba competitors JD.com and Tencent Holdings.