Earlier this month, Mattress Firm, Inc., and its affiliated debtors (collectively, “Mattress Firm”) filed for chapter 11 protection in the United States Bankruptcy Court for the District of Delaware. Through the bankruptcy, Mattress Firm expects to complete a prepackaged restructuring within 45 to 60 days.
Commercial landlords need to pay close attention to this bankruptcy. Mattress Firm has already filed court motions for approval to reject up to 700 leases and will begin to close roughly 200 stores in the next few days.
Specifically, the Debtors have filed seven omnibus motions to reject hundreds of unexpired leases of nonresidential property. The Debtors have also provided notice of “Cure Amounts” to those commercial landlords for which leases have been rejected. The Debtors’ strategy in this bankruptcy proceeding is to renegotiate their leases or reject them outright.
The rights of Mattress Firm’s commercial landlords will invariably be impacted. Below is a link to a previous post titled “Ten Things Every Commercial Landlord Should Know About a Tenant in Bankruptcy.” This link provides a brief summary of some of the issues landlords should consider when a commercial tenant such as Pacific Sunwear files for bankruptcy.
Carl D. Neff is a partner with the law firm of Fox Rothschild LLP. Carl is admitted in Delaware and regularly practices before the United States Bankruptcy Court for the District of Delaware. You can reach Carl at (302) 622-4272.