Mall Owner CBL Properties Files Bankruptcy in Bid to Survive

Mall owner CBL & Associates Properties Inc. filed for bankruptcy, blaming the pandemic that’s upended retailers around the world as well as its lenders, who tried to seize rent payments just as the company struck a debt-cutting deal to help it survive.

The bankruptcy filing in federal court in Houston Sunday includes a proposed debt-for-equity swap that would hand unsecured bondholders a 90{964f9ed1dd3881c79743812c3f28effde5b9271ba8701ca882984cc44c5cc62a} stake in CBL in exchange for slashing about $1.4 billion in debt, according to court papers. At the same time, CBL filed a lawsuit against Wells Fargo & Co., the agent representing senior lenders, asking a judge to rule that the bank’s actions in the days before the bankruptcy case were invalid.

The dispute forced CBL to speed up the filing of its bankruptcy case instead of negotiating a broader agreement to help the mall owner deal with Covid-19 related rent losses, CBL said in court papers. More than 30 of its tenants have filed for court protection this year.

A representative for Wells Fargo declined to comment.

Bondholder Bargain

CBL has also asked a judge to let it spend cash that Wells Fargo is holding as collateral for $1.1 billion in loans. That request is likely to be the first in a series of battles between CBL and Wells Fargo and the lenders.

The mall owner, based in Chattanooga, Tennessee, said it owes about $4.5 billion to creditors. In the months leading up to the bankruptcy filing, CBL had warned shareholders that it would file bankruptcy if it failed to get debt relief.