A company that made several billions € profits last year, and which stock price is down a cataclysmic 20% from its highs, Just asked us to gift (not postpone) rent for 2Q Absolutely shameless I'm this close to outing them in public
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Replying to @RaphaelKahan
Not sure if you saw it but
@LAForeverHall had a thread today on the gambit retailers can play with landlords. In US, in BK landlords only entitled to 3.5 yrs of lease payments. Avg lease term is >>3.5y. So tenant is betting the landlord will give them a pass rather than file2 replies 0 retweets 2 likes -
Where are you getting this info re: BK awards? The vary MASSIVELY state to state, most leases have liquidated damages provisions and OpCov penalties, and attorneys fees awarded to winner (slam dunk LL wins). In MA it’s probably a safe strategy. In NY you will be killed.
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Replying to @innoc_bystander @theunemployeda1 and
Also, I would say that 90% of cases are settled before they ever get to judgement so it’s not public record. But say it is 3.5 yrs and use Cheesecake as ex. Avg store ~10k sf. $50psf gross. $500k ann. That $1.75MM due immediately, plus lost depreciation. Per store. Suicide.
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Replying to @innoc_bystander @theunemployeda1
Think the confusion here is that is specifically in Chapter 11 and doesn’t have to be paid immediately; usually just gets thrown in the GUC pool. Dependent on master lease agreements co can choose to assume or reject leases; unlikely to reject them all. Becomes game theory IMO.
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Replying to @LAForeverHall @theunemployeda1
I was assuming T is bluffing and leveraging the environment to take advantage of LLs with poor debt service coverage ratios. In Ch. 11 they still cannot be in default of the Lease. Need to continue to pay rent, and then Leases go to auction a la Toys R Us.
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If you don’t pay your rent and are in default of the Lease then Ch. 11 does not save you you from eviction in the event of default any more than filing bankruptcy stops a mortgage company from foreclosing.
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True. You have to pay your rent IF you wanna keep the lease. Otherwise, lease is rejected and the landlord gets a claim of the greater of 1 year of rent or 15% of remaining rent to max of 3 years. This is the claim that becomes GUC and not payable immediately. Hope this helps!
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Replying to @LAForeverHall @theunemployeda1
Makes sense. But for a company that (on the surface) is not facing eminent BK after 1 down month, this is a very dangerous game. Same rules don’t apply pre-BK, so damages are subject to state case law. Often times those are not T favorable. If BK unavoidable playbook changes.
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