Busted Retailers Use Bankruptcy to Break Leases by the Thousands
- Chapter 11 bankruptcy allows retailers to cut leases en masse
- Widespread rejections pose challenges for struggling landlords
A pedestrian wearing a protective mask walks past a boarded up J. Crew Group Inc. store in Washington, D.C.
Photographer: Andrew Harrer/BloombergThis article is for subscribers only.
With the pandemic intensifying the plight of U.S. retailers, companies from J. Crew Group Inc. to the owner of Ann Taylor are using Chapter 11 bankruptcy filings to quickly get out of costly, long-term leases and shutter thousands of stores.
By seeking court protection, firms like Neiman Marcus Group Inc. and the parent company of Men’s Wearhouse avoid the headache of protracted negotiations with individual landlords. But the moves threaten to upend huge swaths of the real estate market and the half-trillion dollar market for commercial mortgage-backed securities.