Busted retailers use bankruptcy to break leases by the thousands • Hacker News Board

Re: Busted retailers use bankruptcy to break leases by the thousands

#41

Post by landryraccoon » Thu, Aug 06, 2020, 8:10 PM UTC

morganvachon wrote: post #28

seibelj wrote: post #3

This is exactly why we have bankruptcy! These businesses are failing and need to renegotiate their liabilities. This is expected and healthy if you want any retailers to have any hope of survival going forwards.

> This is exactly why we have bankruptcy! You're not wrong, and under normal circumstances this would be a blip on the radar. However, the hundreds if not thousands of locations each of these companies plan to shutter will have an unprecedented effect on the commercial real estate market. Within months we will have thousands of property owners suddenly unable to pay their mortgages because they no longer have tenants…

I hope it ends up causing residential real estate prices to fall as a consequence. Maybe then millennials will be able to afford homes.

I understand some people treat their home as savings but that's bad in every way for society and for the homeowner. I have a home and the only return I expect on it is to be able to continue living there. I'm certainly not going to depend on it for my retirement, as that would be really unwise.

Re: Busted retailers use bankruptcy to break leases by the thousands

#42

Post by dencodev » Thu, Aug 06, 2020, 8:11 PM UTC

gremlinsinc wrote: post #29

asdfasgasdgasdg wrote: post #4

It's basically the definition of bankruptcy that you need to renege on your obligations to someone. Landlords run that risk. They're hardly the ones losing the most -- think of the poor creditors and shareholders. The landlords are only losing the expense of finding their next tenant, plus any difference in the market rate when the original lease was signed and today.

I think everyone loses regardless, but I don't think we should prop up businesses, capitalism should be a game that you play to win or play to lose. Government needs to stop getting involved period. Help at the bottom - prop up the citizens who the government IS responsible for, let the rest duke it out. Corporations are not citizens. Government has no duty to help corporations. But, yeah everybody will hurt by this,…

Lmao gang hideouts

Re: Busted retailers use bankruptcy to break leases by the thousands

#43

Post by Bombthecat » Thu, Aug 06, 2020, 8:12 PM UTC

fl0wenol wrote: post #31

soperj wrote: post #27

Earlier quoted context omitted.

the point though they're making is that if they die, then it can massively affect the banks. The knock on effect could be huge.

Oh well, those banks should have had a backup plan

The backup plan is state money.

Re: Busted retailers use bankruptcy to break leases by the thousands

#44

Post by dencodev » Thu, Aug 06, 2020, 8:12 PM UTC

floatingatoll wrote: post #17

It's a bit depressing to see the greed-by-framing here. I feel like the banks are playing musical chairs rather than trying to operate sustainably. It seems like a more efficient approach — one that is not as economically destructive to GDP after the pandemic — would be: 1. Retailer notifies their lease holders that a given location is impacted by public health closures, reducing revenues for products originating fro…

7. Abolition of private property

Re: Busted retailers use bankruptcy to break leases by the thousands

#45

Post by Bombthecat » Thu, Aug 06, 2020, 8:13 PM UTC

landryraccoon wrote: post #41

morganvachon wrote: post #28

Earlier quoted context omitted.

> This is exactly why we have bankruptcy! You're not wrong, and under normal circumstances this would be a blip on the radar. However, the hundreds if not thousands of locations each of these companies plan to shutter will have an unprecedented effect on the commercial real estate market. Within months we will have thousands of property owners suddenly unable to pay their mortgages because they no longer have tenants…

I hope it ends up causing residential real estate prices to fall as a consequence. Maybe then millennials will be able to afford homes. I understand some people treat their home as savings but that's bad in every way for society and for the homeowner. I have a home and the only return I expect on it is to be able to continue living there. I'm certainly not going to depend on it for my retirement, as that would be rea…

Everyone still wants to live in cities. Firms want to settle in cities. If shops close, it wont change much.

Re: Busted retailers use bankruptcy to break leases by the thousands

#46

Post by dencodev » Thu, Aug 06, 2020, 8:14 PM UTC

tyingq wrote: post #24

xwdv wrote: post #7

This will come back to haunt them. Good luck.

How so? I'm genuinely curious what the downside for retailers would be in this case. As opposed to staying in place and paying the rent.

Our Lord and savior, the banks, won't lease again to those bad men at the retail companies

Re: Busted retailers use bankruptcy to break leases by the thousands

#47

Post by cobookman » Thu, Aug 06, 2020, 8:15 PM UTC

Bombthecat wrote: post #45

landryraccoon wrote: post #41

Earlier quoted context omitted.

I hope it ends up causing residential real estate prices to fall as a consequence. Maybe then millennials will be able to afford homes. I understand some people treat their home as savings but that's bad in every way for society and for the homeowner. I have a home and the only return I expect on it is to be able to continue living there. I'm certainly not going to depend on it for my retirement, as that would be rea…

Everyone still wants to live in cities. Firms want to settle in cities. If shops close, it wont change much.

You could see commercial real-estate be converted to residential.

Re: Busted retailers use bankruptcy to break leases by the thousands

#48

Post by simonh » Thu, Aug 06, 2020, 8:15 PM UTC

derefr wrote: post #30

Digory wrote: post #23

Earlier quoted context omitted.

>ghost towns ...if rents don't fall. And maybe they should.

I think I've seen it stated that property developers and property-management companies are often heavily leveraged, such that they can't lower rents; in about the same way that a VC firm with a ten-year investment time horizon on their fund can't invest in your startup if all your valuation-growth will come only after 11 years. In both cases, the lenders and shareholders of the firm, have contractually obligated the…

Then they are doomed. Their current tenants can’t afford the current rent, and no new tenants are going to come along at that rent level while this crisis is still ongoing, so what are they going to do?

If the current tenants can be viable if rents are reduced, along with other cost saving measures, then maybe that’s a least worst outcome for society and the landlords.

Ultimately though, to me, the actual business leasing the property, employing people and providing service to customers is doing more for society and the real economy than a heavily leveraged management company. Those retail businesses don’t deserve to exist on any terms, but if they do have value, then I think they’re worth giving a second chance.

Re: Busted retailers use bankruptcy to break leases by the thousands

#49

Post by dencodev » Thu, Aug 06, 2020, 8:16 PM UTC

usaphp wrote: post #10

sartethought wrote: post #5

[flagged]

technically this will allow "working people" to continue having their jobs, otherwise the retailers will have to fire anyone and go out of business.

Won't someone please think of the retail jobs that exploit workers and don't pay a living wage

Re: Busted retailers use bankruptcy to break leases by the thousands

#50

Post by Ijumfs » Thu, Aug 06, 2020, 8:16 PM UTC

mikestew wrote: post #16

Man, with (currently) four comments mentioning that this is "what bankruptcy is for", I think the point of the article might have been missed. This isn't some sneaky "one weird trick", and that's not the reason Bloomberg is reporting on it. In fact, the tone of the article to me is, "yup, companies do it all the time, but..." And the "but" is: But the moves threaten to upend huge swaths of the real estate market and…

Oh no, not the poor poor commercial real estate developers! Anyway all the malls died like decades ago. Have you been to a mall lately? As far as I can tell the only people who go are folks engaged in drug transactions and busloads of tourists from SE Asia.