Friday, January 16, 2009

And there goes Circuit City

I know no one is shocked that CC is calling it quits. I can't remember the last time I walked in one. The bleeding never stopped and unless there's a last minute white knight the liquidation begins tomorrow, and 30,000 people will be unemployed. Sad.

The dirt is often a significant factor in what kills these companies. As today's Journal states,

Retail experts have cited the 2005 overhaul of the U.S. bankruptcy code as one reason so many chains are closing their doors. One such change shortened the period in which a retailer may accept or reject store leases. Retailers used to get a year or more to make those decisions. Now they are given 210 days. Once they accept a lease, the landlord then has an administrative claim against the bankrupt company.

On the flip side, though, landlords get hosed waiting and waiting for retailers to decide whether to accept or reject. So who's next?

1 comments:

Anonymous said...

This is only the beginning. There is also a bubble in triple-net properties where a lot of landlords are going to get burned. A modest premium for a leased property is understandable, but when the value doubles because you have a so-called "credit tenant" anybody can see that this is a sucker's bet. The question is, why hasn't anybody seen this yet.

 
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