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Fewer tenants emerge from bankruptcy thanks to tight timelines

 

 

Bankruptcies are getting deadlier than ever, with struggling companies finding their time to reorganize runs out before they've even had a chance to meet with potential creditors to set up a financial lifeline. Landlords have pushed for legislation to shorten the time companies have to accept or reject leases while under bankruptcy protection, but the move may come back to haunt them as more and more retail chains disappear.

 

In 2016, the average Chapter 11 case took 7.3 months, the quickest ever and less than half the average in 2013, according to data compiled for Reuters from Bankruptcydata.com, which monitors public company filings dating back to 1990. The median case length is 16 months.

 

Hedge funds are also driving quicker Chapter 11 turnarounds with their demands for fast action to get their money back out of a company. Maybe this trend is why between 2005 and 2015, 55% of retail bankruptcies ultimately ended in liquidation.

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