Top 10 retailers to watch for possible Chapter 11 filings in 2022

The last half of 2021 has been practically a ghost town for filing retail bankruptcies. However, the rise of the Omicron variant has significantly delayed a full return to normal for malls. The good news is that the vaccines are working, people are cautiously getting back to work, and the economy is doing well. Yet with the end of COVID-related aid and eviction moratoriums, there are a number of “problem tenants” who may not be able to recover or adapt, forcing them to use the bankruptcy process to remain viable.

Here are our top 10 retailers to watch for possible Chapter 11 filings in 2022.

  1. AMC – Why go to the cinema when you can stream? According to motley fool, despite the over $917 million cash injection from investors earlier this year, there are still plenty of hurdles for the movie company. The rise of streaming services, the slow return of consumers to movie theaters and a significant portion of their current non-convertible debt are all signs that there is a high likelihood of filing for bankruptcy to restructure debt. While a filing isn’t imminent, could it happen later this year?

  2. Pie Five and Pizza Inn – Two for one? Mashed reports that Pie Five and Pizza Inn are owned by the same parent company, Rave Restaurant Group. Pie Five has a fast and casual focus, where diners choose their toppings at the counter and watch their pies being loaded and placed in an oven. Pizza Inn offers buffet style pizza locations. Both types of restaurants have been significantly impacted by the pandemic. Can they survive?

  3. Nine West – Footwear Company enters a Chapter 22? The women’s shoe company, owned by Premier Brands Group Holdings, previously filed for bankruptcy in 2018. At the time, it reduced debt and sold the Anne Klein brand. However, according to Business Intern, the pandemic caused a significant drop in revenue. The company appears ready for a Chapter 22 filing, which is a second Chapter 11 bankruptcy a few years after the first filing.

  4. Mattress Firm – A Chapter 22 later this year? The company filed for an IPO in early January. Previously, it exited Chapter 11 in 2018 and now has 2,600 stores. However, according to Barrons, the company is highly leveraged with total liabilities of approximately $3.5 billion and long-term net debt of approximately $1.2 billion. Can the company continue to operate with so many stores without filing for bankruptcy?

  5. Barnes and Noble – Can he survive? The acquisition of Paper Source aimed to create synergies between the two. However, the business relies heavily on food concessions and in-store customers. Have shoppers’ habits changed for good due to the pandemic? Forbes still has it on its list of specialty retailers to watch for a Chapter 11 filing.

  6. Rite Aid – A healthier population hurts business. com notes that the US drugstore chain, with 2,500 stores in 19 states, has struggled during the pandemic as fewer people caught colds or coughs while sheltering in their homes. According to Moody’sthe company is in danger of default because it has $1.5 billion in high-risk debt outstanding.

  7. Equinox – Another gym folder? According to Crain’s New Yorkthe landlords are suing the private health club for more than $6 million in back rent. Bloomberg noted in February 2021 that the company had reached an agreement that released it from a limited guarantee of SoulCycle’s $265 million credit facility with lender HPS Investment Partners. Still, high rent, multiple locations and other debt issues make the gymnasium an ideal candidate for a Chapter 11 restructuring.

  8. The place of children – The losses continue to accumulate. According to Forbes, the pandemic has accelerated clothing deposits. One retailer at the top of the list for this year is The Children’s Place. The largest children’s clothing retailer is set to close more than 300 stores. Although the company negotiated about $13 million in rent reductions in Q4 2020 for the COVID shutdown period, that might not be enough to avoid a filing.

  9. The hole – Go bankrupt? S. News and World Report notes that the company’s long-term debt fell from 1.24 billion to 2.21 billion in 2020 due to the pandemic. Any further, The street reported that 350 Gap and Banana Republic stores will be closed through 2023. The company previously closed 217 stores through Oct. 30. Can the company avoid a restructuring to get out of its leases?

  10. Capri- According to msn, the retailer, which operates the Michael Kors, Jimmy Choo and Versace brands, has about $7.5 billion in assets and $1.1 billion in long-term debt. The Street notes that the company will close 170 stores through 2022.

If you are an owner, developer and/or landlord, it is important to know and understand how these changes will affect your mall.

COPYRIGHT © 2022, STARK & STARKNational Law Review, Volume XII, Number 38

Anne G. Cash