Retail Chapter 11s: Why Landlords Must Act Early (and On the Record)
Retail bankruptcies are back. Commercial Chapter 11 filings hit a 10-year high in 2025. January 2026 continued the trend: 956 filings, up 76% from 544 a year earlier. Small business filings surged even faster. The stress runs from national chains to local operators.
These cases move quickly. Courts set budgets and hear lease motions in the first weeks. If you are not in those early conversations, you lose leverage—and often money.
What’s driving the wave
This is not about one retailer or one bad quarter. Three forces are colliding:
Old leases and debt priced for cheap money. Many retailers signed leases and borrowed when rates were low and growth looked certain. Those deals no longer work.
Loans coming due at higher rates. Debt that made sense at 4% does not work at 7-8%. Lenders extended terms through 2024-2025. That runway is ending.
A price-conscious consumer. Affluent shoppers still spend. Everyone else is watching every dollar. Retailers caught in the middle face shrinking margins.
The result: leases that cannot support the debt above them. Many names filing now have filed before. These "Chapter 22" cases show that earlier fixes—cutting stores, trimming debt—did not solve the underlying mismatch.
For landlords, the message is clear: the pressure is broad, and tenants that looked stable a year ago may not be today.
Why the first four weeks matter
The first four weeks after a case is filed can set the outcome for a landlord. Courts approve budgets, set lease timelines, and decide how rent gets paid. If you are not part of those conversations, someone else decides for you.
What landlords should do in weeks 1-4
Get your rent in the budget. Rent, taxes, utilities, and other charges must be line items in the court-approved budget. If it is not in the budget, it may not get paid.
File your cure numbers early—with backup. When a retailer wants to keep a lease, it must cure past-due amounts. File your numbers early with invoices and reconciliations. Late or unsupported claims get cut.
Know and use your shopping-center rights. The law gives shopping-center landlords specific protections: proof the tenant can pay, preservation of use and exclusivity clauses, and protection for percentage rent. Put these on the record. Build a factual case the court can enforce.
Do not forget stub rent. When a filing lands mid-month, first-period rent gets prorated. Across a portfolio, this adds up. Assert these rights early.
Watch the 363 sale. Sales can move fast, but they do not erase your lease rights. Raise your issues before the sale closes, not after.
Plan for the case to run short on cash. Not every case pays all its bills. Repeat filers—so-called "Chapter 22" cases—face particular risk: courts are skeptical of feasibility, and many of these cases end in liquidation when the second reorganization fails to address the same structural problems that caused the first. Watch actual spending against the budget. If liquidity gets tight, adjust your expectations and your strategy.
Consider the creditors’ committee. If you face multiple rejections or large exposure, a seat on the official committee gives you a front-row view of budgets, timelines, and strategy. Committees have leverage that individual objections rarely achieve.
Timing note: The debtor has 120 days (plus one 90-day extension) to decide on leases. In practice, store-level decisions often happen in the first 30-60 days. Your leverage is strongest before those decisions are made.
Bottom line
Retail bankruptcies are rising. The critical decisions happen in the first month. Preparation before filing—and action in the first week—can be the difference between getting paid and getting left behind.
If you or your clients have exposure to at-risk tenants, please reach out to Mette H. Kurth (mette.kurth@pierferd.com) or your regular PierFerd contact for assistance.
This publication and/or any linked publications herein do not constitute legal, accounting, or other professional advice or opinions on specific facts or matters and, accordingly, the author(s) and PierFerd assume no liability whatsoever in connection with its use. Pursuant to applicable rules of professional conduct, this publication may constitute Attorney Advertising. © 2026 Pierson Ferdinand LLP.
