OBJECTION!: More landlords today joined an objection filed Monday by a group that includes GGP Inc. in a bid to ensure Wet Seal Inc. pays up on rent due after the company’s bankruptcy filing earlier this month.
The group is pushing back on the teen retailer’s request to a bankruptcy court judge to approve various motions, including a post-petition plan on how the company’s cash collateral is to be used. The landlord group argued in their objection that the plan protects the retailer’s secured lenders and does not include payment of stub rent, or the rent due to the property owners after the company’s Chapter 11 filing. That is, rent owed from Feb. 2 to Feb. 28, the latter date of which is the expected end date of Wet Seal’s liquidation sales.
Among the group of landlords is Simon Property Group Inc., Brookfield’s Rouse Properties Inc. and Turnberry Associates, in addition to others.
If the goal is to liquidate in bankruptcy, the landlords’ objection said, “they must pay to play, including immediately paying the landlords’ stub rent for the stores where they are conducting [going out of business] sales.”
The total to the landlords amounts to “millions of dollars,” according to the objection filed, with the group seeking immediate payment.
Wet Seal last month began holding store closing sales with storewide discounts online and off. That was then followed by the Chapter 11 filing Feb. 2 and the hiring of Hilco Streambank to market its intellectual property, a now all too common trend among more recent retail bankruptcies in which prospective buyers have seen little value beyond companies’ brands.
The Chapter 11 is Wet Seal’s second following its emergence from the first in spring 2015, when it was acquired at action by Versa Capital Management LLC.
The company tried unsuccessfully to look for capital or restructuring opportunities more recently. Its inability to do so triggered the layoffs, liquidation and subsequent bankruptcy filing.