Chattanooga mall owner CBL says he was forced to file for emergency bankruptcy

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This story was updated at 4:48 p.m. on Thursday, November 5, 2020, with more information.

Mall owner CBL & Associates Properties Inc. alleges in a lawsuit that a bank acting as an agent for some of its lenders forced CBL to file for accelerated bankruptcy this week.

“While the company intended to have a deliberate and thoughtful entry into Chapter 11, it had to rush for an emergency filing over a weekend due to the utterly illegal, unnecessary and unprovoked administrative officer,” CBL said in the lawsuit. .

Chattanooga-based CBL said in the lawsuit that the agent, Wells Fargo Bank, National Association, was trying to exert control over some of the mall operator’s properties, including Northgate Mall in Hixson. Some 22 CBL properties were used as collateral for a line of credit that lenders had previously extended to CBL.

CBL said Wells Fargo late last month sent nearly 400 letters to more than 200 tenants at the properties, ordering them to start paying rent to Wells Fargo instead of CBL.

“Wells Fargo’s illegal conduct has created chaos and confusion for CBL tenants and has forced CBL to file for accelerated bankruptcy and, if not immediately restrained, threatens to jeopardize the success” of the reorganization of the company’s Chapter 11, according to the lawsuit.

US Bankruptcy Court Judge David Jones has agreed to issue a temporary restraining order sought by CBL against Wells Fargo, and he has scheduled a hearing on the matter later this month.

Benjamin Rosenblum, an attorney representing Wells Fargo, said Thursday he could not comment on CBL’s lawsuit.

CBL, one of the nation’s largest shopping center operators, announced on Monday that it had filed for Chapter 11 bankruptcy protectionbeaten by the coronavirus pandemic and the shift of many shoppers to online retailers.

Still, the longtime company said its centers would remain open and “business as usual” as it reworks its massive debt load in bankruptcy court. Court documents said the company had $2.58 billion in total debt.

In Chattanooga, the Company operates the Hamilton Place and Northgate malls as well as nearby malls. CBL’s portfolio includes 107 properties totaling 66.7 million square feet in 26 states.

In the lawsuit filed in US bankruptcy court in Houston, CBL said it entered into a $1.18 billion senior secured credit facility in January 2019, with Wells Fargo serving as administrative agent for a group of lenders.

As the coronavirus began to spread across the country in Marchaccording to the suit, owners of shopping centers such as CBL were facing an unprecedented and multifaceted threat to their business, with tenants filing for bankruptcy at a breakneck pace.

Despite the challenges, CBL has worked diligently to ensure it continues to make every payment to Wells Fargo and meet the terms of its agreement, he said.

As CBL considered its options, including a Chapter 11 restructuring, it continually negotiated in good faith with its key stakeholders, including Wells Fargo and bank lenders and their advisers, in an effort to reach a resolution. consensual, according to the suit.

But, according to the lawsuit, apparently unhappy that CBL had reached an agreement on a global restructuring transaction with a group of debenture holders, Wells Fargo sought bargaining leverage against CBL in August by calling for the immediate repayment of more than $1.1 billion in loans under “the appearance of alleged defaults without merit”.

Two months later, the lawsuit said, and once again clearly unhappy with a recent offer from bondholders, Wells Fargo “decided to pounce,” including an alleged takeover of some CBL assets.

“Faced with the worst global pandemic in a century that has seen the United States experience the largest decline in economic output on record, Wells Fargo has sought to profit from this societal and economic upheaval to the detriment of CBL,” said the trial. noted. “Based on baseless allegations of default, Wells Fargo is seeking to justify an alleged ‘acceleration’ of more than $1.1 billion in loans and the reckless exercise of ‘remedies’ against CBL.”

Contact Mike Paré at [email protected] Follow him on Twitter @MikePareTFP.

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