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Mall Owner Files For Chapter 11 Bankruptcy Protection

The Chautauqua Mall. Submitted photo

The owner of the Chautauqua Mall has filed for chapter 11 bankruptcy protection. Washington Prime Group Inc. made the announcement via a news release Sunday night.

“The company’s financial restructuring will enable WPG to right size its balance sheet and position the company for success going forward,” said Lou Conforti, CEO and director of Washington Prime Group. “During the financial restructuring, we will continue to work toward maximizing the value of our assets and our operating infrastructure. The company expects operations to continue in the ordinary course for the benefit of our guests, tenants, vendors, stakeholders and colleagues.”

The mall owner noted that the COVID-19 pandemic created “significant challenges for many companies, including Washington Prime Group, making a Chapter 11 filing necessary to reduce the company’s outstanding indebtedness. Throughout the restructuring process, the company remains committed to serving as a preeminent operator of retail town centers and will continue to serve its guests. Importantly, the company will continue to prioritize the health and safety of our guests, retailers, employees and communities.”

In May, Washington Prime Group received its sixth forbearance extension with creditors — but the mall company’s losses continue to mount as negotiations with creditors crawl along.

In February, Washington Prime, which owns the Chautauqua Mall in Lakewood, missed a $23 million interest payment that began a 30-day grace period for the company to negotiate its debt with lenders. That negotiating period has been extended six times as the company works with lenders and other creditors to restructure Washington Prime’s debts.

According to Bloomberg News, one of the issues complicating the negotiations is the value of and claims on Washington Prime’s real estate that isn’t already pledged as collateral on outstanding debt.

“There can be no assurances that the company will be able to continue to amend the forbearance agreements or extend the forbearance periods or that its lenders or noteholders will not accelerate the company’s indebtedness outstanding under the senior notes or its credit facilities after the expiration of the forbearance periods,” Washington Prime officials said in a news release announcing first quarter financial statements. “In connection with these negotiations, the Company incurred approximately $14.5 million of legal and professional costs through March 31, 2021, which have been recorded to general and administrative expense in the accompanying consolidated statements of operations and comprehensive loss for the period then ended.”

Washington Prime officials first said in March that a bankruptcy proceeding may be necessary to protect the company from creditors.

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