CBL & Associates Properties Inc. has gone bankrupt.
The mall giant — whose shopping centers are located primarily in the Southeast and the Midwest — announced this morning that it filed for Chapter 11 protection in the United States Bankruptcy Court for the Southern District of Texas. It plans to reorganize the company and restructure portions of its debt as the COVID-19 health crisis continues to hammer retail real estate owners across the country.
“After months of discussions and consideration of a number of alternatives, CBL’s management and the board of directors firmly believe that implementing the comprehensive restructuring as outlined in the RSA through a Chapter 11 voluntary bankruptcy filing will provide CBL with the best plan to emerge as a stronger and more stable company,” CEO Stephen Lebovitz said in a statement.
As part of the restructuring support agreement it entered into in mid-August, CBL intends to erase about $900 million in debt and at least $600 million in other financial obligations. The plan would also allow it to extend its debt maturities and increase liquidity as it continues all day-to-day operations throughout proceedings.
“Upon emergence, CBL will be in a better position to execute on our strategies and move forward as a stable and profitable business,” Lebovitz added.
As of Sept. 30, CBL had roughly $258.3 million in unrestricted cash on hand and available-for-sale securities. It shared that ongoing operations have generated positive cash flow for the business. What’s more, the company has filed various customary motions with the court to seek several types of relief that would allow it to continue paying employee wages and benefits as well as honor customer and vendor commitments.
The Chattanooga, Tenn.-based real estate giant, which owns 107 shopping centers across the country, has faced mounting financial pressures stemming from the coronavirus pandemic: As retailers sought to maintain their cash flow by skipping out on rent payments, some commercial owners — who need to meet their own mortgage terms — have been forced to take legal action against their tenants in order to recoup payments and keep their own businesses afloat.