Washington Prime Group Inc. filed for Chapter 11 in Texas bankruptcy court, marking another phase of the retail fallout from the ongoing COVID-19 pandemic — the effect of retail’s rent struggles and store closures on malls.
“WPG was forced to provide certain tenants with rent relief through a combination of rent deferrals and abatements to avoid tenant bankruptcies and lease abandonments during most of 2020, when in-person commerce was largely nonexistent,” Washington Prime’s chief financial officer Mark E. Yale wrote in a declaration filed in the case.
With that in mind, the proposal incorporates a so-called “toggle feature,” which would allow the company to pursue potential investors and buyers for the business. The company and its bankers have marketed Washington Prime’s business to potential strategic and financial partners for the past month, and have sought to continue that process for longer during the bankruptcy.
“You’re starting to have a resurgence of business, people are getting vaccinated, stores are reopening, and you can see the real estate market has gone berserk in so many parts of the country. “It provides, as with any bankruptcy, breathing space to deal with the problems comprehensively as opposed to a one-off fashion,” said Brian Free, attorney at Hillis Clark Martin & Peterson P.S., who has no role in the Washington Prime case and commented broadly.
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