The last half of 2021 was virtually a ghost town for filing retail bankruptcies. However, the rise of the Omicron variant has significantly delayed a full return to normal for shopping centers. The good news is that the vaccines work, people are cautiously resuming activities, and the economy is running well. Still, with the end of both COVID-related relief and eviction moratoriums, there are a number of “problem tenants” that may not be able to recover or adapt, forcing them to use the bankruptcy process to stay viable.

The following are our top 10 retailers to watch for possible Chapter 11 filing(s) in 2022.

  1. AMC – Why Go to the Movies When You Can Stream? According to the Motley Fool, despite the more than $917 million in cash infusion from the investors at the beginning of the year, there are still numerous obstacles for the movie theater company. The rise in streaming services, slow return of consumers to theaters, and a significant portion of their current debt being nonconvertible are all signs that there is a high likelihood of a bankruptcy filing to restructure the debt. Although a filing may not be imminent, could it occur later this year?
  2. Pie Five and Pizza Inn – Two for One? Mashed reports Pie Five and Pizza Inn are owned by the same parent company, Rave Restaurant Group. Pie Five has a fast-casual focus, where diners choose their toppings at a counter and watch as their pies are loaded and placed in an oven. Pizza Inn has buffet pizza locations. Both types of restaurants have been hurt significantly in the pandemic. Can they survive?
  3. Nine West – Footwear Company Walking into a Chapter 22? The women’s footwear company, owned by Premier Brands Group Holdings, previously filed for bankruptcy in 2018. At the time, it reduced debt and sold the Anne Klein trademark. However, according to Business Insider, the pandemic has caused a significant drop in revenue. The company looks poised for a Chapter 22 filing, which is a second Chapter 11 bankruptcy within a few years of the first filing.
  4. Mattress Firm – A Chapter 22 Later This Year? The company filed for an IPO in early January. Previously, it had emerged from Chapter 11 in 2018 and now has 2,600 stores. However, according to Barrons, the company is significantly leveraged with total liabilities at roughly $3.5 billion, and net long-term debt was about $1.2 billion. Can the company continue to operate with this many stores without filing for bankruptcy?
  5. Barnes and Noble – Can It Survive? The acquisition of Paper Source was meant to create synergies between the two. However, the company is heavily reliant on food concessions and in-store customers. Have buyer habits changed for good due to the pandemic? Forbes still has it on its list of specialty retailers to watch for a Chapter 11 filing.
  6. Rite Aid – A Healthier Population Hurts Business. notes that the U.S. pharmacy chain, with 2,500 stores in 19 states, had a rough go during the pandemic, as fewer people came down with colds or coughs as they sheltered at home. According to Moody’s, the company is in danger of default as it holds $1.5 billion in outstanding high-risk debt.
  7. Equinox – Another Gym Filing? According to Crain’s New York, landlords are pursuing the private health club for more than $6 million in back rent. Bloomberg noted in February 2021 that the company reached a deal that released it from a limited guarantee of SoulCycle’s $265 million credit facility with lender HPS Investment Partners. Still, the heavy back rent, multiple locations, and other debt issues make the gym a perfect candidate for a Chapter 11 restructuring.
  8. The Children’s Place – Losses Keep Piling Up. According to Forbes, the pandemic accelerated apparel filings. One retailer listed at the top of the list for this year is The Children’s Place. The largest children’s apparel retailer is on track to close more than 300 stores. Although the company negotiated about $13 million in rent abatements in the fourth quarter 2020 for the COVID-closure period, it may not be enough to avoid a filing.
  9. The Gap – Fall Into Bankruptcy? S. News & World Report notes that the company’s long-term debt increased from 1.24 billion to 2.21 billion in 2020 due to the pandemic. Further, The Street reported that 350 Gap and Banana Republic stores are being closed through 2023. The company previously closed 217 stores through Oct. 30. Can the company avoid a restructuring to get out of its leases?
  10. Capri – According to MSN, the retailer, which operates the Michael Kors, Jimmy Choo, and Versace brands, has about $7.5 billion in assets and $1.1 billion in long-term debt. The Street notes that the company is closing 170 stores through 2022.

If you are an owner, developer, and/or landlord, it is important to know and understand how these changes will affect your shopping center. Stark & Stark’s Shopping Center and Retail Development Group can help. Our attorneys regularly represent owners, developers and the landlord throughout the country in leasing, buying/selling, 1031 Exchanges, refinancing, and enforcement activities. One of our specialties is bankruptcy representation nationwide for owners, developers, and landlords..

Currently, our team is providing value-added services to landlords in several Chapter 11 cases including: Regis, Stage Stores, Modell’s, 24 Hour Fitness, Sears, Art Van, Ascena, NPC, Toys R Us, Charming Charlie Part 2, and A&P.

For more information on how Stark & Stark’s Shopping Center & Retail Development Group can assist you, please get in touch with Thomas Onder, Shareholder, at (609) 219-7458 or, or Joseph Lemkin at (609) 791-7022 or Tom and Joe write regularly on commercial real estate issues and are both active members of ICSC. Mr. Onder is State Chair for ICSC PA/NJ/DE region.