The owner of the Washington Prime Group Inc. shopping center filed for Chapter 11 bankruptcy on Sunday evening, citing the COVID-19 pandemic for making the decision necessary.
The company, which grew out of the nation’s largest mall operator, Simon Property Group in 2014, currently has 102 malls, according to documents filed with the U.S. South District Bankruptcy Court. Washington Prime is based in Columbus, Ohio.
Several retailers – some with locations in Washington Prime properties – have filed and exited bankruptcy since May 2020 amid the pandemic, including Christopher & Banks, Guitar Center, New York & Company, JC Penney, Stein Mart, Sur La Table, Ascena Retail Group and Tuesday morning. The bankruptcies have included store closings.
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“The COVID-19 pandemic has created significant challenges for many businesses, including the Washington Prime Group, making a Chapter 11 filing necessary to reduce the company’s outstanding debt,” the Washington Prime Group said. in a press release.
The bankruptcy of the mall operator comes as no surprise. In public documents, Washington Prime said it is in talks with its creditors to restructure its finances and may seek bankruptcy protection.
In announcing its bankruptcy filing, the company said it has secured $ 100 million in “debtor-in-possession financing from willing creditors to support day-to-day operations during the Chapter 11 process and ensure all business operations continue. in the ordinary course of business. without interruption.”
Lou Conforti, CEO and director of Washington Prime Group, said in the statement that the restructuring will allow the company to “resize its balance sheet and position the company for success in the future.”
Shopping malls were in trouble before the pandemic.
But experts said the crisis could accelerate the closure of underperforming shopping centers and the reallocation of many centers that remain open. Ultimately, 1 in 4 and up to 1 in 2 shopping centers could eventually close their doors, according to projections by analysts and executives at Coresight Research.
Coresight, which tracks retail store closings, predicted in 2020 that about 25% of U.S. malls will disappear over the next three to five years.
But it could be up to 50% “if we can’t stop the bleeding,” Deborah Weinswig, CEO of Coresight, said in an interview with USA TODAY last summer. “It ends up changing the face of America.”
Contribution: Nathan Bomey and Charisse Jones, USA TODAY
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