CBL debtor Laredo seeks approval of settlement, dismissal of case

By Sarah Lizee

Olympia, Wash., July 27 – CBL & Associates Properties, Inc. debtor Laredo Outlet Shoppes, LLC is seeking court approval of a settlement with lender U.S. Bank NA and dismissal of its bankruptcy case, according to a joint motion filed Monday with the U.S. Bankruptcy Court for the Southern District of Texas.

Laredo said that despite prior negotiations over a long-term solution for the Outlet Shoppes at Laredo, the parties were not able to reach a consensual agreement.

In May 2020, U.S. Bank moved to appoint a receiver for the Laredo property and, after that, Laredo commenced its Chapter 11 case, which U.S. Bank then moved to dismiss.

At a June 2 hearing on cash collateral use, the court suggested the parties engage in a mediation to attempt to reach a resolution in order to maximize the value of the Laredo property.

Following mediation, the parties agreed to a comprehensive settlement that includes a two-year extension of the term of the Laredo loan, with an option for a third year, an agreed-upon maximum unsecured $5 million deficiency claim, certain covenants and defaults, and mutual releases.

To avoid the expense associated with prosecuting a formal plan of reorganization, the parties agreed to effectuate the settlement through a stipulated dismissal of the Laredo bankruptcy case.

The settlement is supported by both the official committee of unsecured creditors and the informal group of noteholders.

Laredo said holders of general unsecured claims will not be adversely impacted by the settlement agreement as they will be continued to be paid in the ordinary course.

CBL is a Chattanooga, Tenn.-based owner and developer of malls and shopping centers. The company filed Chapter 11 bankruptcy on Nov. 1, 2020 under case number 20-35226.

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