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

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

#201

Post by Karunamon » Fri, Aug 07, 2020, 12:50 AM UTC

gwright wrote: post #199

refurb wrote: post #196

Earlier quoted context omitted.

Sure, other people will pick up the pieces but that doesn’t mean much to the blue collar worker who is out of a job for 2 years while someone “takes their place”.

I think it is better to reinforce social safety net programs for individuals (unemployment, food stamps, section 8 housing, etc) than it is to subsidize businesses. Businesses can restructure and re-allocate assets through sales, mergers, or even bankruptcy. In particular subsidizing now obsolete business models is madness to me. Help individuals who need help (why did stimulus checks go to people who still had jobs…

>why did stimulus checks go to people who still had jobs or who were retired?

Because many people who still technically had jobs had their hours drastically cut, and because it's an economic stimulus, not strictly welfare.

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

#202

Post by PaulDavisThe1st » Fri, Aug 07, 2020, 12:51 AM UTC

linuxftw wrote: post #182

munk-a wrote: post #139

Earlier quoted context omitted.

That would cause a massive economic disruption that could potentially lead to actually bad economic effects. Right now things aren't all sunny and happy for everyone but they can get a lot worse if infrastructural components of the economy start getting eroded - either by being chopped up for vulture capitalists or by having their lending chain & backers divided up similarly. If Fedex & UPS were to be forced to sell…

> If Fedex & UPS were to be forced to sell off package delivery in NYC Then the market will adjust. If you can't get packages delivered in NYC, you will have to get your goods through some other means. Maybe all of NYC is a bubble. Maybe that many people shouldn't live on a handful of tiny islands, importing their food from the mid west and their goods from China. Maybe everyone's in the wrong place.

Maybe.

But if that's true, is the correct solution to crash-and-burn from the current scenario to some version of a "better" one?

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

#203

Post by PaulDavisThe1st » Fri, Aug 07, 2020, 12:52 AM UTC

brudgers wrote: post #75

derefr wrote: post #30

Earlier quoted context omitted.

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…

What happens is someone with money buys out the deal for pennies on the dollar or there is a successful renegotiation with lenders or there is a successful renegotiation with the limited partners (in the US most real-estate deals are structured as limited partnerships with the general partner as an LLC). Basically, except in the first scenario everyone agrees to suffer together. In the first scenario, the initial inv…

What does the good deal look like here if there no new tenants ?

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

#204

Post by PaulDavisThe1st » Fri, Aug 07, 2020, 12:54 AM UTC

Ijumfs wrote: post #89

paulryanrogers wrote: post #87

Earlier quoted context omitted.

Malls are also a place to walk, shop, and play for families during winter. In colder areas it's often dark sooner so outdoor activities are more limited.

They used to be. That all stopped in the 1990's.

Maybe for you. I'm not much of a mall-goer, but every once in a while, I find myself in one of few that are (or were, pre-COVID19) still thriving, and they seem very much alive in this respect.

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

#205

Post by PaulDavisThe1st » Fri, Aug 07, 2020, 12:59 AM UTC

shard wrote: post #190

true_religion wrote: post #172

Earlier quoted context omitted.

I don’t think it’s derision, just the attitude that people in power ought to defend themselves. Banks have no shortage of money, lawyers, and friends in high places. They do not need you or I also apologizing their actions. If anything we should be extremely suspicious of ant bailout and scrutinize it to ensure it’s well deserved, and will result in a better society overall.

I was referring to landlords, which many of mine have been just small time business owners who scrimp and save to make a living. One lived in the garage of the house he was renting out in order to make ends meet. Technically they have the power since they own the properties, but laws are very tenant friendly, and often landlords get left with the short end of the stick if there is a dispute.

This is not a useful anecdata-driven analysis of the commercial real estate market. Yes, landlords like the ones you know do exist. They do not own substantive commercial real estate, and certainly not the stuff the Neiman Marcus or GNC have been renting.

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

#206

Post by 01100011 » Fri, Aug 07, 2020, 1:01 AM UTC

simonh wrote: post #48

derefr wrote: post #30

Earlier quoted context omitted.

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 le…

Inflation to the rescue? If rents decline in real dollars but go up in fiat dollars, does it resolve the situation where renters can't afford rent and property owners need a certain profit?

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

#207

Post by PaulDavisThe1st » Fri, Aug 07, 2020, 1:03 AM UTC

TheOtherHobbes wrote: post #177

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.

There's a difference between strategic failure caused by poor management and interruption of a viable business by an external event - force majeure. You can buy insurance policies to protect your business against the latter. (Although with Covid a lot of insurers are refusing to pay out, and some are being taken to court.) Where there's no insurance it's reasonable for government to act as an informal insurer of last…

One could make an argument based on what we've seen during COVID19 so far that very large sections of the US economy are not genuinely viable. They've been fabricated out of the whole cloth that we call debt, they have almost zero resilience in the face of negative economic factors, and they participate in widening income and wealth inequality by not actually being the locus of viable family-supporting jobs.

Nobody has wanted to acknowledge that so much of the US economy is a house of cards. COVID19 isn't forcing people to do so, but is making it much clearer.

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

#208

Post by PaulDavisThe1st » Fri, Aug 07, 2020, 1:05 AM UTC

AnimalMuppet wrote: post #52

borkt wrote: post #8

Earlier quoted context omitted.

It’s going to have severe consequences somewhere down the line as I don’t believe anything nearing the magnitude and density of the coming bankruptcies has ever occurred. That being said I agree it’s meant to be this way, and I will always prioritize RESPONSIBLE business trying to restructure and preserve jobs over landholders who basically do very little work while extractIng as much rent out of their tennants as th…

Ever? 1929, maybe? Crash of 1879? Or am I being uncharitable, and you mean recently?

There was a lot more regional and even local independence in the economy when these happened. Vastly more people still worked in agriculture, and economies produced far more of what they needed within much more limited areas. 1929 was bad, but the economy then had more of a "node" structure. Today, it is more of a "web", and tugging hard anywhere stands a good chance of pulling the whole thing apart.

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

#209

Post by dredmorbius » Fri, Aug 07, 2020, 1:06 AM UTC

gremlinsinc wrote: post #184

vkou wrote: post #151

Earlier quoted context omitted.

> if only the government/bank could've put moratoriums top down, freezing all rent commercial and residential. We'd be in a much better place. This is exactly what I was saying in March, but everyone was too busy clutching their pearls, concerned about what will happen when pension funds lose a few percentage points of their value. Well, now they are going to lose a few percentage points of their value, in addition t…

I don't see how it becomes a runaway train, esp. w/ the congressional gridlock we have now. There's no statesmanship, no concern for the people of America, just the top 1%, so they'll probably come out okay. They won't starve or be on bread-lines. Everyone else though will suffer tremendously. If all recurring payments just froze...for 1 year. If we locked down like Europe. We'd have had a better time. Now it's a shi…