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Washington Prime Bankruptcy Proceeds

The owners of the Chautauqua Mall are seeking to cut the property’s taxable assessment nearly in half.

The mall has filed an Article 7 case — one of dozens throughout the county — asking the court to reduce its taxable assessed value from $9,260,000 to $4,846,400.

Lowering the taxable assessment on the Chautauqua Mall would save the struggling property tens of thousands of dollars. The mall is set to pay $92,133.80 in town and county taxes in 2021.

Washington Prime Group, the corporate owners of the Chautauqua Mall, are looking to bigger savings to keep its portfolio of malls afloat. The company entered Chapter 11 bankruptcy in mid-June with an eye toward either a full equitization of its unsecured notes or an alternative value-maximizing transaction that would repay, in full in cash, all of the company’s corporate-level debt. The bankruptcy filing came at the same time Washington Prime had secured a $100 million in debtor-in-possession financing from some of the company’s creditors. The money will provide the immediate operational needs and liquidity to take Washington Prime’s properties through the bankruptcy proceeding.

Doing so, according to an FAQ on Washington Prime’s bankruptcy proceeding website, there should be no impact on mall operations nor on the operations of retailers who have space in Washington Prime Group malls.

“We expect business as usual at our town centers,” the FAQ states. “WPG currently does not expect this process to materially impact our operations, retailers, vendors, partners and the communities we serve. WPG town centers will continue to serve our guests, and our guests will not notice any change in our operations. WPG plans to continue operating as normal with a primary focus on the health and safety of our guests, retailers, employees and communities.”

While the $100 million in financing was secured when the bankruptcy was filed, it was formally approved by the U.S. Bankruptcy Court on July 8. At the same time, the Bankruptcy Court has payment of up to $12.5 million in customary trade claims, though traders must continue providing services to Washington Prime on customary terms in the future; to continue to pay and honor tenant obligations as well as a host of other payments that will allow the Chautauqua Mall and other Washington Prime properties to operate as they normally do.

As the restructuring plan is currently structured, Chautauqua Mall would be part of the Washington Prime Group LP, which would include 30 properties, mostly in Indiana and Delaware as well as one Pennsylvania facility.

The equitization path for Washington Prime would swap existing debt for $1 billion in new equity in the reorganized company in a debt for equity swap. Under a Chapter 11 bankruptcy proceeding, existing equity shares in a company are typically canceled, with the company reissuing shares to debt holders. Then, the bondholders and creditors become the new shareholders in the company.

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