As the Coronavirus pandemic continues to stretch on, and states are only slowly reopening, there has been a slew of large retailers to file for bankruptcy including J. Crew, Pier 1, Tuesday Morning and JC Penny - all of whom have large national footprints. Many shopping center owners and managers are wondering what they should prepare for as more large retailers are expected to file for Chapter 11 bankruptcy. It is first important to understand the different types of bankruptcy. The purpose of bankruptcy is to allow a retailer time to reorganize, restructure, and move forward in a way that helps them fulfill on their unfulfilled promises - typically regarding debt and underutilized retail space. In some cases, bankruptcy does lead to store closures, but this doesn‚Äôt always have to be the case.
There are two traditional types of bankruptcy - Chapter 11 or Chapter 7 bankruptcy. Chapter 7 is a full liquidation of all assets. This means the brand isn‚Äôt planning to emerge in any state from bankruptcy. If a brand in your shopping center files for Chapter 7 bankruptcy, there is a need for more aggressive planning. Recently, however, most large brands like the ones listed above are filing for Chapter 11 bankruptcy which means they will continue to operate after their filing is complete.
If you do have a brand in your shopping center that has recently filed for bankruptcy, there are a few things you can do to make sure you are appropriately prepared.
Regardless of the outcome, bankruptcy can be a stressful process for any landlord. The best course of action is to stay involved and understand when and where evictions are possible. Many times, there are other courses of action that can result in an easier path than eviction.
If it does look like the brand is going to be closing your local store, or you want to work with legal council to have them evicted, then you should also be prepared to fill the space as quickly as possible. Retailsphere makes it easy to begin prospecting for new tenants in your area.
By digitally researching and communicating with new brands through Retailsphere, and with a clear understanding of bankruptcy deadlines for brand, you may be able to quickly transition a new tenant into your newly vacant spaces with little to no down time.
Sign up for a no-obligation demo today and see how Retailsphere helps you stay ahead of vacancies.
This does not constitute legal advice. We recommend that you consult with legal counsel regarding any eviction process.