The owner of the York Galleria Mall, the York Town Center and The Outlet Shoppes at Gettysburg filed for Chapter 11 bankruptcy on Monday.
CBL & Associates Properties Inc., CBL & Associates Limited Partnership and certain other related entities have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas.
Chapter 11 bankruptcy provides businesses or large investors with protection from creditors while they continue operating and develop a repayment plan. Both creditors and owners must agree on a reorganization plan, which ultimately must be approved by a federal bankruptcy judge.
The York Galleria Mall and the nearby York Town Center are located in Springettsbury township, York County while The Outlet Shoppes at Gettysburg is located in Mount Joy Township, Adams County.
CBL said that its shopping centers will remain open.
Mark A. Renzi, managing director of Berkeley Research Group and an advisor to CBL & Associates Properties Inc. noted in court documents that the struggles of retailers this year due to COVID-19 have impacted CBL.
“Retailers’ struggles, and, consequently, their ability to keep their stores open and satisfy their rent obligations, have been compounded by the COVID-19 pandemic and the resulting shut down orders and other restrictions imposed by state and local authorities,” he said. “Indeed, in 2020 alone, more than 30 of the Company’s retail tenants have commenced their own chapter 11 cases, some of which have closed—or are in the process of closing—stores at the company’s properties, resulting in significant loss of rental revenue to the Company.”
CBL Properties is based in Chattanooga, Tennessee and owns and/or operates 107 properties across 26 states, including 65 enclosed, outlet and open-air retail centers. CBL operates eight shopping centers in Pennsylvania.
“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,” Stephen D. Lebovitz, CEO of CBL said in a press release. “With an aggregate of approximately $1.5 billion in unsecured debt and preferred obligations eliminated and a significant increase to net cash flow, upon emergence, CBL will be in a better position to execute on our strategies and move forward as a stable and profitable business.”
And CBL isn’t the only mall owner to file for Chapter 11 bankruptcy. PREIT, the owner of the Capital City Mall in Lower Allen Township filed for bankruptcy on Sunday. PREIT also owns a mall in the Scranton area and a number of shopping centers in the Philadelphia area.
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