Asheville – The parent company of the Asheville Mall filed for bankruptcy November 1 to restructure its surmounting debt. CBL Properties, which owns 107 shopping centers across the country, promised to keep the malls operational through the bankruptcy. CBL’s Chapter 11 filing is commonly referred to as “reorganization bankruptcy.” The voluntary bankruptcy allows for the retail conglomerate to recapitalize the company and pay creditors over time.
“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,” said Stephen D. Lebovitz, Chief Executive Officer of CBL in a November 2 press release.
The bankruptcy filing in federal court in Houston includes a Restructuring Support Agreement plan that aims to reduce its debt by $1.4 billion. The plan outlines a debt-for-equity swap that would hand unsecured bondholders a 90% stake in CBL in exchange for absolving $1.4 billion in debt, according to court papers. The real estate investment trust has $900 million in debt and $600 million tied in “other obligations.”
“Business as Usual”
The Asheville Mall and other properties will continue to operate throughout the bankruptcy.
“It’s business as usual at CBL’s properties,” said Lebovitz. He promised that visitors will not notice a change in their shopping experience.
The past five years have seen the demise of department stores and malls across the country. Two of CBL’s largest partners, Sears and J.C. Penney, also filed for bankruptcy in October 2018 and May 2020, respectively.
Financial analysts worry this may mark the demise of shopping centers. Coresight Research estimates 25% of the United States’ roughly 1,000 malls will close in the next 3–5 years.
Meanwhile, online shopping continues to grow, fueled in part by COVID-19 restrictions and the convenience of ordering online and product shipments arriving in days rather than weeks. More and more Americans, once reluctant to order online for many reasons, now surf the net for everything from groceries to cleaning supplies to clothes and electronics.