The owner of Markland Mall has been given a two-week extension to restructure its debt as part of a last-ditch effort to avoid filing for bankruptcy, but the company has indicated that it may be inevitable.
Washington Prime Group, which owns around 100 malls in the U.S., skipped a $23.5 million interest payment in February, and was given until March 31 to come up with the money.
That deadline has been extended to April 14 to allow the company more time to find a solution before filing for Chapter 11 bankruptcy.
The extension comes after the company last year lost $111 million due primarily to the “significant impacts” from the COVID-19 pandemic, including tenant lease modifications and increased bad debt expense, according to the company’s fourth-quarter financial report.
Washington Prime in 2019 had net earnings of $17.1 million.
Even with the deadline extension, bankruptcy seems to be looming after Bloomberg News reported last month the company has approached investors to determine interest in providing $150 million in bankruptcy financing as the company prepares to file for Chapter 11.
In its earnings report, the company said that although it continues to be open to all discussions about restructuring its debt, “there can be no assurance the company will reach an agreement regarding a restructuring in a timely manner, on terms that are attractive to the company, or at all.
“The company’s management has stated that there exists substantial doubt about the company’s ability to continue as a going concern as defined by generally accepted accounting principles,” it said in its earnings report.
A Chapter 11 bankruptcy from Washington Prime would bring into question the future of Kokomo’s largest shopping area, which encompasses over 390,000 square feet of property.
Since 2018, the company has invested millions into Markland Mall to demolish the former Sears store and build space for seven new tenants. Those new spaces are now filled by Aldi, PetSmart, OshKosh B’gosh, Carter’s and Prodigy Bar & Grill, Party City and Ross Dress for Less.
Until the company files for bankruptcy, it said it “expects to continue to provide quality service to its customers without interruption and work with its business partners as usual during the course of these discussions and any potential transaction.”
Chapter 11 bankruptcy isn’t a full liquidation of assets, but, in most cases, a reorganization or restructuring of debt. In general, the debtor remains in control of its business operations and is subject to oversight by the court. In most cases, some kind of plan to pay off the debt and continue to operate is established, though that requires approval from both the court and creditors.
Washington Prime in total owns 12 properties in Indiana, including shopping areas in Muncie, Indianapolis, Lafayette and Mishawaka.