The owner of Maplewood Mall has filed for Chapter 11 bankruptcy protection after reaching a debt restructuring agreement with most of its creditors.
Ohio-based Washington Prime Group (WPG), which owns both Maplewood Mall and the Northtown Mall in Blaine, said it voluntarily filed for bankruptcy after its key creditor, SVPGlobal, agreed to support several key changes in payments and new interim financing.
The filing took place in the U.S. Bankruptcy Court for the Southern District of Texas.
Washington Prime Group said in a statement late Sunday that it secured $100 million in "new money debtor-in-possession financing from the consenting creditors [SVPGlobal] to support day-to-day operations during the Chapter 11 process."
Washington Prime Chief Executive Lou Conforti said business operations at its malls and shopping centers will continue without interruption.
"The company's financial restructuring will enable WPG to right-size its balance sheet and position the company for success going forward," he said. "The company expects operations to continue in the ordinary course for the benefit of our guests, tenants, vendors, stakeholders and colleagues. … Vendors and service providers [are] expected to be unimpaired and all claims paid in full."
Nashville-based SVPGlobal holds about 73% of WPG's outstanding secured corporate debt and 67% of its unsecured notes.
Under the terms of the restructuring support agreement, nearly $950 million of debt will be erased from the balance sheet through the equitization of unsecured notes and a $190 million paydown of the company's revolving credit and term loan facilities.
The agreement also involves a $325 million equity rights offering that will be fully backstopped by SVPGlobal. The proceeds of that offering will be applied to the paydown of secured debt, officials said.
WPG's action is the latest in a long line of retailers, malls and shopping centers seeking court protection or other help for mounting debt that started rising a few years before the pandemic struck.
J.C. Penney, Neiman Marcus, Lord & Taylor, Brooks Brothers and J. Crew all filed for bankruptcy protection in recent years as foot traffic in malls and stores waned. Christopher & Banks, which was based in Plymouth, filed for bankruptcy and eventually closed, with its online assets bought by Eden Prairie's iMedia Brands.
About five years ago, Americans started opting for shopping online from the comfort of their couches instead of visiting brick-and-mortar stores. That trend expanded dramatically during the coronavirus pandemic, as stay-home orders forced many malls and clothing retailers to close temporarily and exacerbated financial pressures.
The Mall of America restructured some of its $1.4 billion in debt in January 2021 after dozens of tenants were forced to temporarily close because of the pandemic.
In March, MOA lenders took a stake in MOA after its owner, Triple Five Group, defaulted on loans associated with building the American Dream Mall in New Jersey. MOA was listed as collateral on that New Jersey megamall.
Burnsville Center was foreclosed upon last year and now has a new owner.
WPG, Maplewood Mall's owner, hopes the reorganization will help it avoid any liquidation of assets.
"Throughout the restructuring process, the company remains committed to serving as a pre-eminent operator of retail town centers and will continue to serve its guests," WPG said in a statement.