Southern Park Mall owner files for bankruptcy
Claiming assets and liabilities of between $1 billion and $10 billion, the operator of the Southern Park Mall and 101 other retail properties across the United States has filed a pre-arranged Chapter 11 Bankruptcy.
Blaming consumer preferences shifting from brick-and-mortar stores to online shopping, as well as the COVID-19 pandemic for its financial woes, Washington Prime Group on Sunday filed a reorganization plan in Southern Texas Bankruptcy Court.
The Restructuring Support Agreement, supported by a majority of its creditors, would reduce $950 million of Washington Prime’s debt by selling some assets.
The agreement also calls for a $100 million loan to the company to pay employee wages and benefits and meet tenant obligations. Fifty million dollars in revolving credit would also be available to Washington Prime.
A statement issued by the company says operations will be uninterrupted while vendors and service providers will be paid.
The first court hearing on the case is scheduled for Monday in Texas.
“Despite significant progress implementing its business plan, the COVID-19 pandemic proved insurmountable. In response to the public health emergency across the United States, the federal government, and state and local government-imposed shelter-in-place orders and social-distancing protocols, among other measures, intended to stem the spread of COVID-19,” said Washington Prime Executive Vice President and Chief Financial Officer Mark Yale in a court filing. “These measures ceased or significantly decreased foot traffic in WPG’s shopping centers, retail stores, and restaurants.”
Yale says financial difficulties continued despite Washington Prime’s efforts to convert retail properties into mixed usage such as lodging, office, and medical, and making aesthetic “curb appeal” improvements at three-fourths of its properties over the past five years.
At the Southern Park Mall, changes have included the creation of Debartolo Commons, a green space on the property providing the community with a gathering space.
Washington Prime issued the following statement:
“It’s business as usual at Southern Park Mall, and as such, the process will have no impact on active interior and exterior renovations and redevelopment at Southern Park Mall, including DeBartolo Commons. The company has secured access to debtor-in-possession financing and cash collateral and a motion was approved by the court to ensure sufficient liquidity during the Chapter 11 period to run the business without interruption.”