Apr. 15—The owner of Markland Mall has been given another two-week extension to restructure its debt as part of a last-ditch effort to avoid filing for bankruptcy after profits plummeted last year due to the pandemic.
Washington Prime Group, which owns around 100 malls in the U.S., skipped a $23.5 million interest payment in February, and was given until March 31 to come up with the money.
That deadline was extended to April 14 to allow the company more time to find a solution before filing for Chapter 11 bankruptcy.
Now, that date has been extended another two weeks to April 28 as Washington Prime continues discussions with debt holders to restructure its balance sheet to avoid the filing.
Chapter 11 bankruptcy isn't a full liquidation of assets but, in most cases, a reorganization or restructuring of debt. In general, the debtor remains in control of its business operations and is subject to oversight by the court. In most cases, some kind of plan to pay off the debt and continue to operate is established, though that requires approval from both the court and creditors.
The company last year lost $111 million due primarily to the "significant impacts" from the COVID-19 pandemic, including tenant lease modifications and increased bad debt expense, according to the company's fourth-quarter financial report.
Washington Prime in 2019 had net earnings of $17.1 million.
Even with the deadline extension, bankruptcy seems to be looming after Bloomberg News reported last month the company has approached investors to determine interest in providing $150 million in bankruptcy financing as the company prepared to file for Chapter 11.
In its earnings report, the company said that although it continues to be open to all discussions about restructuring its debt, "there can be no assurance the company will reach an agreement regarding a restructuring in a timely manner, on terms that are attractive to the company, or at all.
"The company's management has stated that there exists substantial doubt about the company's ability to continue as a going concern as defined by generally accepted accounting principles," it said in its earnings report.
A Chapter 11 bankruptcy from Washington Prime would bring into question the future of Kokomo's largest shopping area, which encompasses over 390,000-square-feet of property.
Since 2018, the company has invested millions into Markland Mall to demolish the former Sears store and build space for seven new tenants. Those new spaces are now filled by Aldi, PetSmart, OshKosh B'gosh, Carter's and Prodigy Bar & Grill, Party City and Ross Dress for Less.
Washington Prime officials said the company "expects to continue to provide quality service to its customers without interruption and work with its business partners as usual during the course of these discussions and any potential transaction."
Washington Prime owns 12 properties in Indiana, including shopping areas in Muncie, Indianapolis, Lafayette and Mishawaka.
Carson Gerber can be reached at 765-854-6739, email@example.com or on Twitter @carsongerber1.