Bankruptcies Force Malls To Get Creative

The mall of the past, which had multiple department stores, a fast-food filled food court, and a handful of smaller speciality stores is dying. But a new type of mall is rising from the ashes. The catalyst for this creative destruction is of course bankruptcy.

When the Sears and Bon-Ton bankruptcies were announced earlier this year, many predicted that mall owners might be the next to file for protection. As we have discussed on this blog many times, one company filing for bankruptcy often sets off a chain reaction, with related retailers or links in their supply chain following suit. Our firm negotiates a lot of business workouts and represents many creditors in the Milwaukee area for this reason.

What we are seeing in the retail industry following the Sears and Bon-Ton bankruptcies is different. Malls are wondering whether they need 3 or 4 huge department stores as anchors when so much traditional department store shopping is now done online or in stand-alone big-box retailers like Walmart and Target.

Some mall owners are looking at their empty spaces and completely reimagining them. A few are subdividing what used to be large stores into smaller spaces. This is a sort of don’t put all your eggs in one basket approach that also capitalizes on the fact that smaller speciality retailers are doing well right now.

Others are remodeling or demolishing former department stores and turning them into co-working spaces, apartments, fitness centers, and hotels. Larger, sit-down restaurants are also being incorporated into many spaces. The all-in-one shopping experience is transitioning into a more complete live-work-play experience.

These mall transformations are certainly different, but they are not that surprising when you think about the fact that department stores were people magnets, and they are being replaced by people magnets that just happen to be something other than a department store.

The bankruptcy process allows creative changes like this to take place. This is the upside of what is often a challenging and frequently frustrating situation. If your business is in trouble, or you do business with a company that appears to be headed for bankruptcy, it is time to talk to an experienced bankruptcy attorney that can help you take advantage of the situation and come out the other side with a plan for moving forward.

To Bankruptcy And Beyond

“To infinity and beyond!” is Buzz Lightyear’s catchphrase in the movie Toy Story, but it is also a helpful way to think about the bankruptcy process. Infinity and bankruptcy both may seem like the end of the line, but, in theory, there’s more out there to explore for those who are brave enough to try.

When one of our Milwaukee-area business clients comes into our office to talk about filing for bankruptcy, all most can think about is the act of filing itself. They aren’t thinking about what it will be like to come out the other side. But there is another side, just like there is something beyond infinity.

While common knowledge would say that there can be nothing beyond infinity, in geometry, if you go beyond infinity, you start coming back to your starting point from the opposite direction. Filing for bankruptcy can be like that as well. Bankruptcy pushes you toward a limit, and when you can go no further, you suddenly find yourself on the other side, with a business that is different, but still alive and kicking.

Need further persuasion that filing for bankruptcy is only the beginning? Take a look at this episode of the NPR podcast Planet Money — you can listen to it or read the transcript. It’s a look at the American bankruptcy system through the eyes of the owner of a chain of appliance stores.

It goes into a lot of detail about the shame Roddey Player felt when he filed for bankruptcy on behalf of the business his father built. All that he and his family had worked for for the past 60 years seemed to be slipping away on his watch, and everyone in town knew about it because the local papers covered the case almost from the minute it was filed. His own son, who was away at college texted him, “you OK?” after hearing the news of the bankruptcy second-hand.

Player was not okay, but his story does not end there. He filed for bankruptcy under Chapter 11, which allows for reorganizations instead of forcing a liquidation. He was able to convince his creditors and the bankruptcy judge that they would ultimately be better off if he remained in business. Today, his company is back on its feet, and is even expanding.

Player and his business went to bankruptcy and beyond, and that is what we help our clients do every day. Not every business owner wants to keep the doors open— and some who would like to are unable to— but enough businesses do make it through the Chapter 11 bankruptcy process to prove that it still works.

Our firm has years of experience shepherding businesses through the Chapter 11 bankruptcy process, and we are always interested in helping others who are not ready to give up the fight. We help businesses go to bankruptcy and beyond!

Wisconsin’s Biggest Distillery Goes Bust, But That’s Not The End Of The Story

Just before Thanksgiving, Wisconsin’s largest distillery filed for bankruptcy. Death’s Door, a company named for the hazardous waterway off the tip of Door County, was at death’s door. But that is not the end of Death’s Door’s story. Like many bankrupt businesses before it, the brand has been bought by an investor who plans to retool and resurrect it.

According to the Wisconsin State Journal, Travis Hasse and Tom Maas, partners in Dancing Goat Distillery in Cambridge, purchased Death’s Door for $2.48 million at the end of a five-hour auction that took 24 rounds and included two other bidding groups. The sale was approved by Judge Catherine Furay in the U.S. Bankruptcy Court for the Western District of Wisconsin in Madison, and will be finalized shortly.

“Death’s Door, founded in 2007, had been using contract distillers to make its products until 2012, when it invested $3 million for the construction of a 25,000-square-foot distillery in a Middleton industrial park… [The new facility had the capacity to] produce up to 200,000 cases a year but the facility did not have a tasting room and production leveled off at about 30,000 cases. In October, Death’s Door, the state’s largest distillery, ended its six-year relationship with Serrallés USA, a Puerto Rican rum importer that helped finance the distillery’s construction. When Death’s Door filed for bankruptcy just before Thanksgiving, it was $6 million in debt to more than 100 creditors, which included about $3.5 million owed to Serrallés.”

Hasse and Maas haven’t released specific details about what they plan to do with the Death’s Door brand, but they say they want to grow the brand within Wisconsin. “That’s what I’ve done with our current brands,” Hasse said. “When I started selling Hasse’s Apple Pie (Liqueur) it’s always been Wisconsin. The backyard is what’s important to us.”

This is great news for Wisconsin, and a great example of how the bankruptcy process can be used to save a company rather than shutter it. Our firm works with lots of businesses in the Milwaukee area who want to use the bankruptcy process to take a pause so they can retool and relaunch.

There is a misconception that filing for bankruptcy means a business will be shutting down. Nothing could be further from the truth. The law is designed to both wind down businesses, and to restart them in a way that will allow them to flourish.

If your business in under financial stress, it may be time to talk to an experienced bankruptcy attorney. Attorneys like the ones who work at our firm can help you determine what your options are. And this goes well beyond bankruptcy. Perhaps you can get by just by renegotiating your loans, or by working out an agreement with your creditors.

Maybe it is not you that is in trouble but a supplier or customer, our firm can help protect your business from being dragged down by someone else in your supply chain. The sooner you take action the better.