The Necessity for Co-Tenancy and Other Related Clauses
The retail apocalypse began long before COVID-19 . With many retailers already over-leveraged and shopping patterns changing, retailers were already shuttering stores, seeking a reduction in rent and/or filing bankruptcy. Afterall, many major retailers including anchor tenants like Sears, had already filed bankruptcy. COVID-19 has merely sped up the process. [...]
Bankruptcy Usage of Key Employee Retention Plans and Key Employee Incentive Plans
Introduction Creditors in mega-bankruptcies and people in general are up in arms over the ridiculous bonuses companies are giving their “key” employees and executives -- styled as “retention bonuses.” Pre-Bankruptcy Retention For practical reasons, companies facing financial uncertainty need to retain key employees. Therefore, the Bankruptcy Code enacted a [...]
Get Out of Jail Cards for Leveraged Buyout Fraudulent Transfers
Though the pandemic is the cause of the rising number of retail bankruptcies, major retailers were facing cash flow and insolvency issues prior to COVID-19. Many of them were over-leveraged by virtue of funding the leveraged buyouts of prior ownership. With the change in the retail environment, retailer buyers [...]
The Retail Apocalypse Continues
Retailers are reporting that at least 4,300 stores will close in 2020 and that this number will increase. Prior to the pandemic, Cushman & Wakefield estimated that as many as 12,000 major chain stores could close in 2020. Coresight Research predicted 15,000 store closures prior to the pandemic and [...]
Mall of America Fails to Pay Mortage – Sign of Things to Come for Other Malls and Shopping Centers?
People talk about retail tenants being in financial disarray and filing bankruptcy, but what about our malls and shopping centers? They are hurting, too. If their tenants are not paying rent, taxes, insurance, and utilities, this impacts landlords, who are also struggling to meet their financial obligations, including their [...]
Bankruptcy Courts Allow Business Debtors to Defer Rent in Response to COVID-19
In re Pier I Imports Inc., 20-30805 (Bankr. E.D. Va. May 10, 2020) At least one bankruptcy court has crafted a remedy not otherwise addressed prior to the Coronavirus outbreak. For instance, the bankruptcy court overseeing the Pier 1 Imports bankruptcy case allowed Pier 1 to temporarily defer rent owed [...]
COVID-19 and the Plight of the American Movie Theater
Americans have been going to the movies for more than a century, but for the first time in recent history, theaters are closed, and even if they open in the foreseeable future -- the audience may be limited. With this in mind, many of our treasured movie theaters are [...]
The Case Study of Neiman Marcus and the Fate of Other Department Stores
While the notorious fashion icon, Neiman Marcus, may be the first among retailers to succumb to the economic impact of COVID-19, the virus was only the final straw in a long financial journey – a plight facing many retailers in the past 2-3 years. Background Many of our well-known [...]
Business Interruption: Do You Have the Correct Coverage?
Most people tend to be confused as to the type of event business interruption insurance covers. There actually is a distinction between business interruption and civil authority insurance. Generally business interruption insurance allows a business to recover certain losses in the event that the business suffers physical damage or [...]
Legal Issues Affecting Your Business Amid the Coronavirus Outbreak
With the coronavirus spreading across the world, Bill Siegel has compiled the following list of best practices companies can follow to maintain some semblance of operations and deal with potential legal issues. Issues with Lenders and Loan Documents Material Adverse Effect/Material Adverse Change Clauses: Some Material Adverse Effects or [...]
