MORGANTOWN – The company that owns the Morgantown Mall and the Grand Central Mall in Vienna has filed for Chapter 11 bankruptcy – a result of reduced business during the pandemic, its court filing says.
Washington Prime Group (WPG) filed its petition Sunday in the U.S. Bankruptcy Court, Southern District of Texas, Houston Division. The filing says the company’s portfolio includes 102 shopping centers across the country and operates 97 of them (five are in receivership).
Executive Vice President Mark Yale says in the filing that like many other retail businesses, WPG has suffered from the shift from brick-and-mortar shopping and changing consumer preferences. It adjusted its business plan to accommodate the changes.
“Despite significant progress implementing its business plan, the COVID-19 pandemic proved insurmountable,” Yale says. Stay-at-home orders and social distancing decreased foot traffic across its properties. It was forced to provide rent relief to its tenants to help them stave off bankruptcies and lease abandonments. It also reduced costs through layoffs and furloughs.
In late spring 2020, Yale says, it began negotiating with its lenders for payment flexibility, but mid-2020 COVID surges continued to depress foot traffic into the first quarter of this year.
WPG also entered into new talks with its lenders in late 2020. But failure of those talks and continued underperformance into this year led it to begin exploring restructuring. Restructuring talks resulted in an agreement reached June 11, it says.
“The Debtors are confident that the negotiated path forward will preserve the going-concern value of the Debtors’ business, maximize recoveries available to all stakeholders, and protect the jobs of the Debtors’ employees,” Yale says.
However, “The financial stability of the Debtors’ tenants impacted by the closure or reduction of their operations due to the COVID-19 pandemic, and in turn the future revenue and cash flows of the Debtors, remains uncertain,” Yale cautions. “The Debtors intend to use these chapter 11 cases and the proposed marketing process to maximize the value of the entire enterprise and position their business for future success.”
The restructuring agreement includes $100 million in new financing and other lending measures.
The filing lists the size and occupancy of each of WPG’s properties. Morgantown mall is 555,147 square feet and 68.5% occupied.
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