- Gaps remained in some of the financing and the plan wouldn’t have provided enough cash to cover costs incurred in the bankruptcy, the people said. It also undervalued inventory and other assets relative to what liquidators were promising to pay.
Another key sticking point: Much of Lampert’s bid rested on him getting ownership of the reorganized business in exchange for the forgiveness of $1.3 billion of debt he holds. But the validity of those very claims -- racked up in a series of spinoffs, refinancings and other transactions -- has already been challenged by a group of creditors. The ESL plan didn’t include a cash backstop for that part of the bid.
"So here's my plan. You pretend this shit is all worth 50 cents on the dollar, and I'll pretend I paid you the $1.3b I've siphoned out of this company, and in exchange, you give it to me. Whattayathink, fellas?"
I have a melancholy suspicion that malls are going to do better over the coming years because they're one of the easiest places to find free climate control. Movie theaters were created as a way to get people to pay for air conditioning. As more people share kitchens and bathrooms and fewer people have yards and viable common areas I suspect that malls are going to revamp as places you can hang out all day and be tempted by small things as opposed to places you go to buy big things and end up buying small things. Malls now have Dollar Trees as tenants. This was unheard of even ten years ago.
Even as the late as the late 90s, I saw dollar stores in mall. They wouldn't be in rich malls such as the Short Hills Malls but they weren't entirely uncommon in New Jersey malls.
Malls are tremendously shitty organizations, that are run terribly, and treat tenants as disposable. For the last 10 years or so, I have been consulting with a company that sells pillows in Westfield malls. They have an 'island store' ... one of the ones that sits out in the middle of the floor, but is on a raised platform, has storage, etc. (Not the cart-style mobile phone case stores.) They worked with Westfield to determine the best traffic area for her store, and negotiated a rental fee that was based on quantity of foot traffic around that location. Things worked out pretty well until Westfield decided to do some renovations to the mall, and diverted traffic away from that area. Key stores closed or moved to new locations, so the foot traffic wasn't drawn to that area any more. It became a ghost-town wing of the mall. Her attempts to move the store were denied, and her attempts to renegotiate the rent for the reduced foot traffic (remember: that was the basis of the rental fee) was denied. She finally got permission to invest in signs she could place in other parts of the mall to draw traffic into the "ghost town" area... as long as she paid 80% of the cost of the signs (they offered her $500)... which were then not allowed to stand in "high traffic" areas because they would "obstruct the flow" of foot traffic. Her business went from $24k/mo to $3k/mo. Her rent was $11k/mo. Eventually she had to close down the shop, and Westfield was happier to have her go away - and make the ghost wing of the mall even more of a ghost town - than to lower her rent, give her a new location, or do literally ANYTHING to help ensure her business stayed in business and continued to pay their rent. Malls suck ass. Both for the customer, and the vendor.
Yeah they don't have to, though. I agree - Westfield came to us and said "You should spend $1800 a month on a billboard at our mall!" We came back with "can you show us some metrics and demographics on your foot traffic?" and they said "No! We can't! No one has ever asked for that before! You should feel bad for inconveniencing us with your claptrap! This $1800 offer won't last long!" But there's nothing inherently wrong with the concept of a permanent public market.
One of the longest deaths in American retail history is finally over. RIP
Naaaah turns out Lampert managed to con everyone into jumping at an auction on the 14th.