Bankrupt retail chain asks judge to let it pause paying rent for all stores until July 6, 2020.
By guest author Soma Biswas from Wall Street Journal.
Dozens of J.Crew Group Inc.’s landlords, including some of the biggest mall owners in the country, are seeking rent payments from the retailer’s stores as they reopen, according to court filings.
The chain’s landlords—including Simon Property Group Inc., CBL & Associates Management Inc. and Brookfield Property REIT Inc. —say they deserve to be paid rent on stores as malls and shopping centres reopen. Many states are gradually easing restrictions on retailers that were forced to close stores to slow the spread of the new coronavirus, and have issued guidelines for restarting operations.
J.Crew has asked the bankruptcy court to allow it to stop paying rent on all its stores for 60 days—until July 6—saying it needs to preserve cash after closing about 500 locations in March.
Simon, a landlord for 126 J.Crew stores, said that 30 of its shopping centres reopened in early May in Florida, Georgia and other states.
J.Crew filed for chapter 11 protection in early May after struggling for years before the coronavirus pandemic prompted it to close stores and scrap plans to raise cash by spinning off its Madewell chain.
A committee representing J.Crew’s unsecured creditors has also objected to the retailer’s request to defer rent payments, pointing out the company hasn’t promised to pay back the deferred rent.
J.Crew and its real-estate adviser, Hilco Real Estate LLC, have been trying to negotiate rent concessions with landlords and assessing which stores will shut down for good.
A hearing is scheduled on the matter before Judge Keith Phillips of the U.S. Bankruptcy Court in Richmond, Virginia., on May 26, 2020.
The tension between the company and its landlords echoes battles playing out in other retail bankruptcies. Modell’s Sporting Goods Inc., which filed for bankruptcy just before government mandates forced nonessential retailers to close their doors, won court approval to stop rent payments in March and April and got that extended until the end of May.