Out-of-Court Workouts Can Boost the Odds of a 'Retail Rescue'

Retailers stand a better chance of courting company-saving buyouts and recapitalizations by taking earlier action to restructure their operations, advises A&G executive.

NEW YORK, Oct. 28, 2025 /PRNewswire/ -- Retailers can boost their appeal to potential rescuers by proactively restructuring their operations prior to filing for Chapter 11 bankruptcy protection, advised an executive from A&G Real Estate Partners.

In a thought-leadership piece for Chain Store Age Online, A&G Senior Managing Director Tony Grant notes that today's investors, banks and private equity firms are thinking twice about risking their money on buyouts and recapitalizations of chains that have already entered bankruptcy court.

"They have seen how hard it can be these days for companies to survive after filing for bankruptcy," explains Grant of A&G, a national real estate advisory firm specializing in lease optimization and real estate sales. "It is also clear that Chapter 11 is becoming inordinately expensive for retailers and their creditors."

Nonetheless, writes Grant, retail rescues are still possible. "By making tough choices upfront to consolidate operations, close stores and cut costs as part of an out-of-court workout, distressed companies can significantly increase their appeal to investors," he writes.

In the Expert Viewpoints piece, (Out-of-Court Workouts Can Boost the Odds of a 'Retail Rescue'), Grant offers three tips for maximizing the results of an out-of-court restructuring.

The first is to make tough decisions now. To illustrate the high costs of hesitation, Grant points to the trouble many downtown operators found themselves in after failing to deal with real estate challenges brought on by Covid. "When remote work cratered traffic in these intown areas, the right move was to act immediately to lower the company's occupancy costs, whether by renegotiating leases or terminating them," he observes. "Painful as it can be, it is better to make tougher cuts now than to be too passive and fall short of what is needed to stay viable.

Once that out-of-court restructuring is underway, he continues, retailers need to start a dialog with their landlords and develop an informed strategy for these negotiations. "One of the keys is to be calm, rational and (within reason) transparent," Grant advises. "Your real estate advisors should come to the table armed with the financial histories of the company, the landlords and the locations involved, along with market data such as the trajectory of individual submarkets and shopping centers."

In most cases, landlords will be willing to negotiate in good faith, but it is important to present these owners with "a clear, strong case and lay out the reality of your financial situation," Grant writes.

Valuable information can and often does emerge from these discussions. "For example, maybe the landlord is eager to redevelop the property and is willing to negotiate to secure your consent, per the lease, to bring in the bulldozers," he explains. "Or the landlord might want some additional space that you can provide in exchange for lower occupancy costs."

In other cases, the landlord's goal might be to show lenders full occupancy and several newly inked, long-term leases in the runup to a refinancing or sale. "You might be willing to do that deal—in exchange for better terms," Grant writes. "Many different bargaining chips are possible."

Negotiations can be more successful when retailers present a cohesive front, adds Grant, who has negotiated more than $500 million in lease savings on behalf of a Who's Who of retail, restaurant and fitness operators. "In an out-of-court restructuring, retailers need to avoid the impression that they are merely 'dialing for dollars.' They can strengthen their position with landlords by making sure they understand that the company has conducted a comprehensive portfolio review and has launched a multi-location push to reduce occupancy costs."

When third-party real estate advisors are the face of this effort, it is easier for the company to convey a sense of urgency to its landlords, who can "see that something much larger than a one-off negotiation is underway," Grant explains. "In addition, in an out-of-court process, the real estate restructuring firm can use its manpower, expertise and resources to tackle multiple locations at once."

Non-bankruptcy restructuring projects have the potential to reinvigorate the company. But if courting an acquisition or recapitalization in Chapter 11 does prove necessary, "outside money will have significantly more interest now that the retailer has created higher EBITDA and shown that it has strong, proactive leadership—a C-suite willing to make tough decisions and execute the initiatives needed to right the ship."

Read the full article here:
https://chainstoreage.com/out-court-workouts-can-boost-odds-retail-rescue

Media Contacts: At Jaffe Communications, Elisa Krantz, (908) 789-0700, [email protected].

SOURCE A&G Real Estate Partners