Due to the COVID-19 pandemic, dozens of major retailers have filed for Chapter 11 protection, seeking to slash debt and renegotiate leases. Some retailers, like JC Penney, have emerged with new owners, reduced footprints and staff, and commitments to focus on e-commerce.
As BPM Partner Edward Webb explains, bankruptcy is more of a restructuring, rather than a “lights-out” situation. He states that when the pandemic started, some retailers with large real estate investments that were likely already teetering on the brink of bankruptcy found themselves in a position where they couldn’t negotiate their way out, having “to use bankruptcy as a mechanism to deal with all those leases.”
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