Short Circuit City

Circuit City isn't closing just a few stores; it's closing them all.  It announced today that its efforts to reorganize/sell the company have failed, and it's going to liquidate.  30,000 jobs gone.  567 more dark anchors in strip and regional malls.  Well, Best Buy must be happy.  At least for now.

Mall Wars, Round II

General Growth Properties is hating life.  Not as much as Holladay when it ends up as the one responsible for the weed patch that used to be Cottonwood Mall, but it hates life.  It's another business that's been accumulating debt for the last 15 or so years and now finds that the properties it acquired with that debt won't cover it.  Now GGP is threatening to dive into bankruptcy.  Given what's happening with mall tenants, I'd say that's more like a promise.

Look at the list of retailers that have shut down completely in the last year: Mervyn's, Linens 'n Things, Steve & Berry's (Wah.  I bought my casuals there.), KB Toys, The Bombay, Sharper Image, Woolworths (not just a store, an institution), Harold's (another hole blown in Trolley Square).  Add the selective closings such as Office Depot in Gateway and Murray and Sears in American Fork, and you're going beyond dark space to the kind of tomb-like quality that the downtown malls in Ogden and SLC had before they were torn down.  And we're building more.  The bloodbath cometh.

Bankruptcy Builds Up

Bankruptcies went up 47% in Utah in 2008.  That's still just half what they were before Congress granted the credit card industry its wish and locked the courthouse doors to most people, but given the new barriers for filing, it's a graphic representation of the dismal state of affairs.  It doesn't promise to improve soon, either.  Where the traditional cause of a bankruptcy filing used to be a specific event (divorce, job loss, hospital stay), it now seems to be systemic.  Households and businesses alike have simply accumulated so much debt over time that it's crushing them.  And the triggering element in that debt load is more frequently real estate, with debt service going through the roof and value going through the floor, be it personal residence or investment property.

And what if you're one of the millions being crushed.  Bankruptcy is not the end of the line; it's a new beginning, at least if you get smart about your finances.  I took a construction company into Chapter 11 bankruptcy (used for reorganizing businesses) in Fall 2007.  Normally you have to file a plan in Chapter 11 explaining how you're going to reorganize and operate the company.  We didn't need to get that far.  We negotiated away a few problem debts, and were able to dismiss the case.  The company emerged stronger, and today, in spite of the construction climate, the company is still making its way.