Consumers’ flight from brick-and-mortar stores in malls became a major problem for retailers as internet sales and e-commerce began taking business away from physical stores in the 1990s.
Malls were hit even harder from the shutdowns during the Covid-19 pandemic, with retail slowly recovering over the last six years.
Boatworks at Tahoe LLC, a Lake Tahoe shopping mall and hotel owner, filed for Chapter 11 bankruptcy protection to avoid a foreclosure auction that was scheduled for Aug. 12.
Boatworks at Tahoe files for bankruptcy
The Tahoe City, Calif., owner of Boatworks Mall and the adjacent Inn at Boatworks on Lake Tahoe’s North Shore filed its petition in the U.S. Bankruptcy Court for the Eastern District of California on Aug. 11, listing $10 million to $50 million in assets and debts.
Citizens National Bank of Texas in January filed a notice of default against Boatworks at Tahoe on its $14.4 million loan after the debtor failed to pay property taxes and provide proof of insurance. The debtor is controlled by San Francisco developer MJD Capital Partners, according to SFGate.
Bankruptcy halts legal action
MJD’s Chapter 11 filing invokes an automatic stay on all legal actions against the debtor while the bankruptcy case proceeds.
The debtor did not indicate in its petition if it planned to reorganize the Boatworks Mall business and restructure its debt or sell its assets in bankruptcy.
Owner planned property redevelopment
MJD purchased the property in 2019 with plans for a rebuild of the property. The developer planned to demolish the property in 2024, which included an 80-room hotel, 31 condominiums, and 8,000 square feet of retail space, but the project never proceeded.
A planned redevelopment would have moved the mall’s retail closer to street level and away from the adjacent marina, according to Katherine Hill, executive director of the Tahoe City Downtown Association.
“Our board is committed to supporting our businesses in Tahoe City. We see the Boatworks Mall as an important part of our community,” Hill told SFGate.
Boatworks Mall consists of a mix of retail, office and non-profit operations, including women’s boutique Camila’s at Tahoe, resort wear shop The Lucky Horseshoe, Steve Schmier’s Jewelry, Tahoe City Chocolates candy shop, Acorn Home Furnishings and Design, souvenir shops Tahoe T-Shirtery and Tahoe Boho, makeup and eyelash shops, and training and yoga studios.
The upscale mall also houses The Snow Sports Museum and Placer County Library Tahoe City branch, as well as an architectural firm and general construction contractor.
The Inn at the Boatworks opened in 1958, and the mall opened 20 years later in 1978.
Another upscale mall files bankruptcy
Boatworks isn’t the only upscale mall facing financial issues, as Blackhawk Plaza in Danville, Calif., filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Central District of California in March amid defaulted loans and lawsuits.
The Blackhawk area in Danville is an upscale community for which the Blackhawk Plaza accommodated with high-end retail tenants and restaurants, until many began closing following the Covid-19 pandemic.
Investment firm The Ramanujan Group LLC purchased the shopping center at the height of the Covid-19 pandemic in 2020 for $28.3 million. The debtor defaulted on loans totaling $28 million and $3 million from Preferred Bank and $5 million from Nano Bank, according to SiliconValley.com.
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