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 34-room 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 managed by San Francisco firm MJD Capital Partners, according to SFGate.
“Staying open is crucial for the business, the employees, and the community,” MJD Capital Partners’ Marie Murphy said in a statement. “A Chapter 11 reorganization of the LLC that owns this iconic project legally prevents foreclosure while the business restructures.”
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 plans to remain open while it reorganizes its assets in bankruptcy.
“We continue to believe a mixed-use redevelopment is the best way to revitalize Boatworks and preserve its unique character,” Murphy said. “Foreclosure would be a major blow to the area. For over four decades, Boatworks has been Tahoe City’s place to be. With this reorganization, we intend to continue our efforts to ensure that legacy continues.”
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.