THE OWNER OF 100 SHOPPING CENTERS IS ABOUT TO GO BANKRUPT IN THE USA

North American real estate investment company CBL & Associates Properties Inc. is getting ready for the bankruptcy proceedings. Informed sources report the company has stepped up negotiations with its creditors to consider a possible restructuring under Chapter 11 of the US Bankruptcy Code.

Back in April, the organization hired financial and legal consultants from Moelis & Co. and Weil Gotshal & Manges to help the CBL manage its debt burden. The shares in CBL itself have recently fallen by 11% after the leading media of the US reported on the preparations for bankruptcy.

CBL owns over 100 shopping centers throughout the United States.

Basically, these are the premises of the so-called B class that have a fairly high functional characteristics, but not the most advantageous location. These are the very trade enterprises that in recent years have suffered the most due to the so-called “retailer struggle”.  

The companies are trying to win the right for the ability to deliver goods through an e-commerce network. However, the experts point out that the store is not the best place to place the online orders. It is much easier to create a unique combination of goods and pack them for delivery in a special optimized warehouse than in a retail store, whose employees should simultaneously serve regular customers. As a result, leading CBL tenants such as Dick's Sporting Goods Inc. and Ascena Retail Group Inc. showed a serious drop in profits and significant financial disruptions last year.

Back in June, CBL reported that it had lost revenues from the stores that had not received the rent payments during the Covid-19 pandemic.

This forced the company to skip paying interest on a range of debt obligations. On June 1, the organization did not pay about $ 11.8 million in securities maturing until 2023. This resulted in a 30-day grace period that has already expired.

On June 16, the company was unable to make payments on unsecured promissory notes maturing in 2026. The grace period for them has also expired in mid-July.

As a result, CBL has accumulated more than $ 3 billion in liabilities.

And although the company has an agreement with creditors to defer the payments, it is clear to everyone that the deferral cannot be continued indefinitely. Sooner or later, the company will have to pay the bills.

CBL is located in Chattanooga, Tennessee and is owned by the sons of Charles Lebowitz, who acquired the business in 1993. CBL’s CEO Stefan Lebowitz and his family own more than 10% of the company. The main CBL properties are located primarily in the southeastern United States. CBL shares have recently dropped by more than 74% and are now being traded on the stock market for less than $ 1 per share. The market value of the company is estimated at $ 52.3 million.