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The growth of ecommerce has recently caused a rapid pushback and even shutdown of hundreds of shopping malls across the United States. With the ease of shopping online, and the ability to quickly price compare and find mega deals with just the click of a mouse, spending your weekend in a crowded shopping mall is not the American pastime it used to be. Even with hundreds of malls shutting down, the US is still oversaturated with these retail pits, and those malls are currently sitting at roughly $48 billion in loans that are backed by their mall properties and they are all at risk.
Currently, the United States has roughly 23.5 square feet of retail space for every person in the country, compare that to 16.4 feet in Canada and just 11.1 feet in Australia, countries that have the next two highest retail space per capita. With online shopping drawing in customers at a rapid rate, this is an overabundance of retail space that isn’t going to be able to continue to sustain itself. Major department stores like Sears, Macy’s and JCPenney’s have been closing their less profitable stores quietly, but that is having a big impact on malls. Those major brand names are what draws in the crowds, without them it is more difficult for smaller names to get customers and it creates a downward spiral for all the stores located in the mall. Those downfalls have led to some very notable losses on loans. Not only does it create less foot traffic and spending, but it triggers what is called “co-tenancy clauses”, this clause allows remaining tenants the right to end their lease with the mall or to renegotiate their lease.
Currently, more than one third of all securitized mall loans share the space with one of the three major retailers, another third shares it with two. With these stores beginning to shut down the concern that malls are financially failing is real. Currently, these loans sit at nearly $50 billion, and that’s a big financial hit not only to the retail and loan sector, but to the US economy in general. A recent report stated that Sears has been closing many locations, and another 200 malls are at risk of closure if the trend continues. For more information on this topic, check out this article at Business Insider.
Those who have experience working with Laidlaw know that they have years of experience handling a wide variety of financial cases. They have worked for nearly a century helping people in a variety of industries get the financial help they needed to stay strong and relevant.
Unfortunately, a recent case brought against them by Relmada Therapeutics has a lot of people asking: is Laidlaw guilty of fraud?
The basics of the case are simple. In December 2015, Relmada claims that Laidlaw, and its pricipals Matthew Einer and James Aheren, provided them with financial materials that helped them make a decision that ended up costing them money. They now claim that Laidlaw presented them with misleading material and that they should pay for the financial loss Relmada has taken.
Taking the case a step further, Relmada has actually filed a restraining order against Laidlaw and its principals, believing this is a necessary step in protecting them from more harm from the company. Is this lawsuit a signal that Laidlaw is guilty or is Relmada mistaken in pursuing this case?
This kind of case has rarely, if ever, come up against Laidlaw in the past. They have hundreds of happy and satisfied customers, and while mistakes are possible, this company has seemingly created more successes than failures.
While a positive reputation is not a defense against a possible claim, it has caused many in the business world to cast a doubtful eye at the case. In fact, some are actually claiming that this suit is a transparent attempt by Relmada to grab a little money from Laidlaw after making bad business decisions. Naturally, Laidlaw and Relmada have denied all claims of wrongdoing.
So who is at fault here? Well, the case is still going on, so only time will tell who is found guilty and who is found innocent.