Struggling retailers and their asset-based lenders can use out-of-court workouts to escape today’s escalating Chapter 11 bankruptcy costs, advised a restructuring veteran from A&G Real Estate Partners.
Rising Chapter 11 bankruptcy costs have spurred more retailers and other companies to restructure their real estate out of court, explained Andy Graiser, co-president of A&G, during a panel at Debtwire’s 2025 Restructuring Forum in Miami. “Right now, we are working with 14 different companies that are restructuring out of court to avoid Chapter 11,” he said.
Major retail Chapter 11 filings sank to a low of just three in the stimulus-fueled economy of 2022. According to Debtwire’s restructuring database, they rebounded to 17 in 2023, 15 in 2024 and at least 12 so far this year.
“While you cannot reject a lease in a non-bankruptcy, we can put a transaction together with a large number of landlords,” Graiser said. “Our message to landlords is straightforward: There’s a limited bucket of dollars that are available to pay lease termination fees. Either we resolve 90% of the leases in the next 30 or 45 days, or the company will have to file for Chapter 11.”
Providing transparency into the reality of the situation is essential, he added. Given today’s bankruptcy dynamics, the landlord’s recovery could easily be zero.
“Needless to say, not one size fits all and there are many nuances about each case and its capital structure that drive the option to consider an out-of-court restructuring,” Graiser said.
Graiser also highlighted the benefits of a pre-packaged bankruptcy, sometimes called a prepack, in which creditors and the company agree to a detailed plan prior to the Chapter 11 filing. Since time is money in Chapter 11 bankruptcy, he explained, this fast-track approach can be worth exploring.
“Prepacks, quick Chapter 11s, have worked out great,” Graiser said. “I remember us working with Mattress Firm — 35 days, 2,600 stores, 2,200 landlords, $350 million of savings. The point is, it can get done.”
