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“South Florida may be insulated more than other states because of the population influx since the pandemic began and new vaccines may also soften the economic blow,” said Aleida. She noted that this October, Chapter 11 reorganization filings in South Florida were up 70% compared to the year prior.

“Bankruptcy is a lagging economic indicator,” she said. “The spring closures and downturn will likely not appear as actual new bankruptcy or reorganization filings until the end of 2020 or, more likely, the first quarter of 2021.”

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Florida Statute 617.0721(3) allows not-for-profit corporations to hold virtual meetings and Florida Statutes 718.128 and 720.317 authorize condominium and homeowners associations  to conduct elections and other unit owner votes through an online voting system.  These statutes provide associations with the essential flexibility in planning for meetings and holding elections during the COVID-19 era.

Condominium and homeowners associations in Florida have already pivoted to virtual meetings to avoid the risks of contagion. What many associations have yet to discover is the feasibility and cost-saving potential of further allowing their members to communicate and hold board elections electronically.

Our attorneys have been instrumental in assisting condominium and homeowners associations in setting up electronic communications and elections.   The relevant Florida statutes, in effect for several years, allow owners to opt in to electronic communications and/or voting. It is not an “either/or” proposition for the owners.  During the pandemic, more condo and home owners have become comfortable with the electronic platforms.

We guide our clients with the legal documents necessary to allow the electronic changes, as well as the operational adjustments necessary to implement and fully enjoy the benefits the relevant Florida Statutes allow.

The information contained in this document does not constitute legal advice. Please do not hesitate to contact us should you have any questions or need assistance responding to the many issues, which have arisen out of COVID-19.

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“This would be one of the final options if they can’t do it directly with their creditors,” said Aleida. “The reason why I don’t think these are imminent is I would expect there is still the opportunity to negotiate directly with creditors, and creditors are being realistic, and I see a lot of out-of-court workouts taking place. Folks are negotiating, and everyone is being for the most part realistic, settling out of court.”

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The receiver attempted to recover funds under the Florida Uniform Fraudulent Transfer Act and sought to collect tort damages from JPMorgan. The U.S. District Court in Miami dismissed the complaint under Federal Rule of Civil Procedure 12. It held that the receiver failed to sufficiently show JPMorgan had actual knowledge of the Ponzi scheme, which resulted in the Court of Appeals affirming the ruling of the District Court.

Aleida observed that receivers have their limits. “I cannot overstate the importance of the receivership order and what it says and how it says it. It is another lesson for those seeking to implement receivership or receivers.”

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Additionally, Aleida said “this whole experience is showing those older folks who were less inclined to go online that not only is it feasible, doable and fairly easy, but if they are over 65 and have issues and are really concerned about venturing outside of their homes, shopping online is almost a necessity.”

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Forever 21 Inc.’s bankruptcy spells out further retail real estate evolution as uses from housing and hotels to medical marijuana grow houses could replace shuttered stores, brokers said.

The Los Angeles-based clothing and accessories retailer filed for Chapter 11 reorganization Sunday in Delaware with the growth of e-commerce especially among its targeted young shoppers. Forever 21 grew in popularity as a fast fashion store offering trendy apparel at bargain prices.

Forever 21 will close a third of its 534 U.S. stores, but it’s unclear whether any of its 11 South Florida locations will shutter. The retailer said in a news release that it still is determining which locations to close, although it added that it doesn’t expect to exit major markets.

In South Florida, the retailer has stores in top-performing malls with high foot traffic, including Aventura Mall, Sawgrass Mills in Sunrise, Dolphin Mall, Miami Beach’s Lincoln Road and Town Center at Boca Raton. It also has stores at Miami International Mall in Doral, The Shops at Sunset Place in South Miami, Pembroke Lakes Mall, The Gardens Mall in Palm Beach Gardens, Palm Beach Outlets in West Palm Beach and the Palms at Town & Country in Kendall.

Colliers International’s Katy Welsh, senior director retail services in Boca Raton, said she expects stores will remain in trophy assets such as Aventura Mall but could close at Class B and C malls.

Closures would open the door to repurposing traditional retail space, a trend already underway with the decline of big-box retailers, prompting new tenants to eye vacated spaces. Downtown Miami’s Macy’s and Sears at Boca Raton’s Town Center closed last year along with several Toys R Us locations.

Broker Jaime Sturgis said he has received inquiries from marijuana growers and esports companies about opening in space vacated by other retailers, and developers are eyeing the real estate for housing and hotels.

Sturgis, founder and CEO of Native Realty Co. in Fort Lauderdale, said no one had contacted him yet about Forever 21 space, but “there’s a lot of different options. Some are conventional and some are outside the box.”

Forever 21′s average 38,000-square-foot store size, high ceilings, electrical supply and lack of windows make the spaces well-suited for grow houses and esports, Sturgis said.

Esports are live competitive multiplayer video gaming events that draw large crowds.

Welsh, the Colliers retail broker, also said any local Forever 21 closures could prompt evolution of the traditional mall into mixed-use developments. Vacated space could make way for offices or entertainment, although this is more likely for Class B and C malls rather than top performers.

“It seems to be the trend that malls are turning more into a community center where they are bringing in office, residential, hotels and service-oriented, more entertainment-based type of tenant,” Welsh said. ”A lot of the malls are now turning the food court into a food hall, adding electricity at every table so you can sit there and work. That’s what everyone is looking for.”

All these additions are coming at the expense of disappearing or downsizing clothing stores as consumers increasingly buy their clothes online and mainly use brick-and-mortar locations for returns, Welsh said.

Still, she added, brick-and-mortar clothing stores will remain in some form as consumers tend to shop online at stores they have visited. One type of Forever 21 store that is likely to survive is the smaller, 10,000-square-foot location at open-air shopping plazas. They will do well especially if they are next-door to well-performing retailers such as TJ Maxx and Marshalls, Welsh said.

Getting Out of Leases

Forever 21 said it would base its store-closing decisions in part on conversations with landlords but didn’t elaborate.

The company has 120 days after its filing to decide which leases it wants to end, according to Aleida Martinez Molina, a bankruptcy and insolvency partner at Weiss Serota Helfman Cole & Bierman in Coral Gables.

Forever 21 has more leverage in Chapter 11 negotiations with landlords when trying to exit some of its leases, Martinez Molina noted.

“At the end of the day, the bankruptcy filing gives the debtor a lot more power,” she said, adding landlords should be cognizant of bankruptcy laws and their own bargaining tools. “It’s not like Forever 21 can walk away from the obligation, but it certainly changes the dynamics with the landlords.”

If Forever 21 wants to end a lease with time remaining, it won’t be on the hook for the balance of the lease. Instead, a landlord is entitled to payment of the greater of one year’s rent or 15%, not exceeding three years, of the remaining lease term, according to Martinez Molina.

Forever 21 was founded in 1984 by South Korean couple Do Won Chang and Jin Sook Chang. They were ranked by Forbes as billionaires until July when the retailer’s sales declined. The company with 800 stores in 57 countries said it would close most of its stores in Asia and Europe but keep its stores in Latin America.

To continue operations and honor gift cards, it obtained $275 million in financing from its existing lenders including JPMorgan Chase Bank N.A. as well as $75 million in new capital from San Francisco-based finance firm TPG Sixth Street Partners, according to a news release.

“The financing provided by JPMorgan and TPG Sixth Street Partners will arm Forever 21 with the capital necessary to effect critical changes in the U.S. and abroad to revitalize our brand and fuel our growth, allowing us to meet our ongoing obligations to customers, vendors and employees,” Jin Sook Chang said in the release.

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