Retail Bankruptcies Pose Pain for Landlords as Headwinds Persist

Landlords hurting from the commercial real estate downturn are heading for more trouble in bankruptcy court as retailers continue to face headwinds from stubbornly high inflation and interest rates.

Teen clothing retailer rue21 filed Chapter 11 on May 2. Clothing company Express Inc., fell into bankruptcy in April and arts and crafts seller Joann Inc. filed Chapter 11 in March. While some, like rue21, are heading straight for liquidation, others like Express are using the tools afforded them in bankruptcy to turn their business around, in part through shedding burdensome leases at underperforming locations.

The advantages a bankrupt company receives ...