Analysis: Amount of Retail Space Closing in 2018 on Pace to Break Record
The amount of retail space going dark in 2018 is on pace to break a record, as companies with massive floorplans are either trimming back their store counts or liquidating entirely, CNBC.com reported. Department store chain Bon-Ton earlier this week was forced into liquidation, after a plan to restructure the business and keep some stores open fell through. The retailer, with dual headquarters in Milwaukee and York, Pa., was operating more than 200 stores encompassing roughly 24 million square feet. Since 2008, commercial real estate services firm CoStar Group has been tracking the amount of retail square footage slated to close annually. Already in April, more than 90 million square feet of space is expected to be vacated in 2018, including Bon-Ton's stores. That's easily on track to surpass a record 105 million square feet of space shuttered last year, said Suzanne Mulvee, a senior real estate strategist at CoStar.
Occupancy issues are at the heart of many significant retail cases, as detailed in the forthcoming ABI publication Retail and Office Bankruptcy.
Saturday at the Annual Spring Meeting: Don't miss the taping of a special episode of “Eye on Bankruptcy” focused on the next wave of retail cases. Watch a preview. Walk-up registration is welcome.
Puerto Rico Oversight Board Plan Sees Big Budget Surplus
The turnaround plan from Puerto Rico’s federal overseers projects that the island will have a surplus of $6.7 billion over the next six years before debt payments after it takes steps to cut spending and revive the economy, about $400 million more than Governor Ricardo Rosselló estimated earlier this month, Bloomberg News reported. The projections mark the latest boost to the estimates for the financial recovery of the territory, which is receiving an influx of federal aid and insurance money to help rebuild from Hurricane Maria. Rosselló previously raised his forecasts three times in as many months, triggering a rally in the island’s debt that’s caused some prices to double since December. The panel, which was given power by Congress to impose measures on the territory’s government, is set Thursday to approve the multi-year turnaround plan for the bankrupt island, José Carrion, the board’s chairman, said in a statement. It includes an average 10 percent cut in pension benefits for certain retirees, reduces spending for schools and municipalities, and takes steps to foster faster economic growth.
In related news, a commentary by Prof. Lawrence Summers in the Washington Post said that the fundamental problem now in Puerto Rico is the debate between those who believe that salvation lies in more debt relief and more federal support and those who believe in more belt-tightening by Puerto Rico and market-oriented structural reforms. Aid advocates wrongly downplay the efficacy of reform as a way of making the case for more support. Reform advocates fear that support will undermine pressure for reform and so wrongly downplay the need for debt relief and federal support. The result is inadequate support, insufficient reform and a dismal outcome for Puerto Rico, according to Summers. What is needed is much more reform and much more support, especially through debt relief, than now looks likely. Toward that end, the Oversight Board, which has substantial moral authority, needs to provide real leadership by stressing that reform and support are mutually reinforcing.
Proposed Student Loan Cap Could Devastate Law Schools
A bill winding its way through Congress would cap graduate federal student loans and drive many law students into the private loan market, potentially forcing between 20 and 30 law schools to close within five years, Law.com reported. That’s the dire prediction offered to a group of legal educators by Chris Chapman, president of AccessLex Institute, a former private student loan provider and nonprofit organization that now advocates for greater access to law schools. The government's pending overhaul of the student loan system would not only make law school more expensive for many students, but critics argue that it would also exacerbate the academy’s existing racial and socioeconomic diversity challenges by making a law degree accessible only to those with deep pockets or whom private lenders deem low risk. Republicans in the U.S. House of Representatives in December advanced out of the committee a Higher Education Act reauthorization bill that would make several major changes to graduate federal loans.
Nominations Now Being Accepted for the 2018 Class of ABI's “40 Under 40” Program!
Nominations are now open for ABI's “40 Under 40” program. This program recognizes outstanding young insolvency professionals who are driven by success, motivated by challenges and are role models for their peers. If you are, or know of, a dynamic insolvency professional who is committed to growth and excellence both professionally and in your community, this is one opportunity not to be missed! Visit the website for additional details on nominations and applications.
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New on ABI's Bankruptcy Blog Exchange: Parking Tickets, Impounded Cars and Chapter 13
A recent blog post looks at what happens when an automobile is lawfully impounded before an automatic stay comes into effect for traffic ticket fines when the debtor files chapter 13.
To read more on this blog and all others on the ABI Blog Exchange, please click here.