Major Retailers Reportedly Prepare to Close Over 3,000 U.S. Stores
Several major retailers, listed below, have reportedly said they will close a combined 3,000 or more U.S. locations in 2023. The reasons vary, from the need to cut costs, to actual bankruptcy proceedings.
- Bed Bath & Beyond
- Foot Locker
- Rite Aid
- Tuesday Morning
- CVS
- Walgreens
- Christmas Tree Shops
- Bath & Body Works
- Gap and Banana Republic
- Party City
- Walmart
- Best Buy
- Target
- Moosejaw
- Lidl
- Amazon
- Big Lots
- The RealReal
- Macy’s
- JCPenney
New York Office Buildings Lost Billions in Value from Recent Sales Prices
Analysts and brokers, such as JLL, reportedly claim that office buildings in New York City have lost $76 billion in value from their most recent sales prices. Real estate firm Cushman & Wakefield recently predicted there could be 1 billion square feet of unused U.S. office space by 2030. The New York Fed said earlier this year that while the residential rental market has bounced back, the retail and office markets have remained slack with commercial rents sagging below where they were before the pandemic. This comes as hundreds of billions of dollars in commercial real estate loans held by banks are set to mature between this year and 2027, according to banks and analysts.
Small Business Bankruptcies Increase as Capital Becomes Scarce
Small business bankruptcies are rising this year at the worst pace since the pandemic due to increased interest rates, stricter lending standards and higher operating costs, according to a recent Wall Street Journal report. The report cited data from the American Bankruptcy Institute, which says that almost 1,500 small businesses filed for bankruptcy in the first nine months of 2023 under Subchapter V of the Bankruptcy Code, which is a relatively recent provision allowing for a more streamlined, cost-efficient version of Chapter 11 reorganization. Bankruptcy trustees explained that, unlike larger companies, such smaller businesses may end up in bankruptcy because, when they need cash, they typically can’t issue stock or seek capital from other sources like private equity investors. Studies reflect that many smaller U.S. businesses have no ready access to emergency funding or only have access to 30 or 60 days’ worth of emergency cash funding to operate.
SVB Bankruptcy Closes its Sale of Investment Banking Business
SVB Financial Group, which filed Chapter 11 bankruptcy as the parent of failed Silicon Valley Bank, announced it completed the bankruptcy sale of its investment banking business, SVB Securities LLC (now named Leerink Partners LLC), to the management team bidder group led by Jeff Leerink, Leerink Partners’ Chief Executive Officer and Founder, and backed by funds managed by The Baupost Group L.L.C. R&E successfully advised and represented landlords in connection with SVB Financial Group’s bankruptcy sale.
How to Protect Yourself
R&E frequently represents landlords, lenders and other parties in such major retail bankruptcies, as well as middle market size bankruptcies across various industries, to assess their risks and rights and to formulate strategies for recovery and liquidity concerns, including how best to access and apply security deposits or letters of credit, as well as other businesses concerned about the present and potential future impact of the unique challenges faced in the current economic climate. Accordingly, now would be a good time for you to conduct a review of any contract, loan and/or security agreements with any potentially troubled counterparties. Feel free to contact your trusted R&E attorney or John D. Giampolo, Member & Head of the firm’s Bankruptcy & Reorganization Department, to assess your risks and rights, to assist with any lease review and to formulate strategies to best serve you.