The owner of Clay Terrace has filed for bankruptcy, an action caused in part by the COVID-19 pandemic’s impact on retailers, according to company officials.
Washington Prime Group, which owns Clay Terrace and approximately 100 other shopping centers throughout the nation, filed for Chapter 11 protection June 13 in the U.S. Bankruptcy Court in the Southern District of Texas.
The announcement wasn’t unexpected to many, as it followed a report in March that Washington Prime had missed an interest payment on its debt and was considering filing for bankruptcy.
According to a press release, the bankruptcy will allow Washington Prime to implement a comprehensive and consensual financial restructuring of the company’s corporate-level debt that will allow it to substantially deleverage its balance sheet and strengthen its business and operations going forward, either through a full equitization of the company’s unsecured notes or an alternative value-maximizing transaction that would repay, in full, in cash, all of the company’s corporate-level debt.
Day-to-day operations at Washington Prime’s retail centers are not expected to be impacted by the bankruptcy filing.
“The company’s financial restructuring will enable WPG to right size its balance sheet and position the company for success going forward,” stated Lou Conforti, CEO and director of Washington Prime. “During the financial restructuring, we will continue to work toward maximizing the value of our assets and our operating infrastructure. The company expects operations to continue in the ordinary course for the benefit of our guests, tenants, vendors, stakeholders and colleagues.”
A WPG spokesperson stated that guests should expect “business as usual” at Clay Terrace and that redevelopment efforts are proceeding.
“We expect the process to have minimal impact on our operations, including active leasing and redevelopment efforts at Clay Terrace. WPG has secured access to debtor-in-possession financing and cash collateral and a motion was approved by the court for approval to ensure sufficient liquidity during the Chapter 11 period to run our business without interruption,” the statement read.
Washington Prime filed plans to redevelop a portion of Clay Terrace to include residential units, a hotel, parking garage and other improvements just as the COVID-19 pandemic took hold in early 2020. The pandemic initially delayed those plans, but several months later, a representative for Washington Prime stated in documents filed with the city that the pandemic brought more urgency to transform the shopping center to include a greater variety of uses.
The Carmel City Council approved plans to redevelop Clay Terrace at its final regular meeting of 2020. Washington Prime has not revealed a timeline for redevelopment of Clay Terrace, and it’s not clear how a bankruptcy filing would alter it.