U.S. Bankruptcy Judge Craig Gargotta has dismissed a bankruptcy petition filed by the owner of Austin’s Highland Mall, saying that the mall owner was not acting in good faith when they filed Chapter 11 bankruptcy. The owner of the Highland Mall has had trouble keeping tenants due to the general decline of the mall. The mall is 39 years old and according to former retail tenants, the mall has become a retail “ghost town” which suffers from general neglect of the grounds and facilities. Dillard’s has been attempting to end their lease at the mall and even sued the owners.
In March 2009, Dillard’s sued the mall. Dillard’s said the mall’s then-owners had allowed the center to deteriorate to the point it had become a retail “ghost town” and had let maintenance lapse. Dillard’s asked the court to let it leave the mall without paying any penalty.
But according to Dillard’s, the owner of the mall used a bankruptcy filing to gain an advantage in their dispute regarding the lease.
Dillard’s said the filing was the owner’s attempt “to gain a tactical advantage in litigation and/or negotiations” in a lawsuit filed last year by Dillard’s and in a separate dispute with American General Life and Accident Insurance Co.
The bankruptcy judge agreed with Dillard’s and dismissed the mall owner’s bankruptcy filing citing that there was no reason for the company to file bankruptcy. A matter of fact the mall owner has no secured debt to reorganize and the company is solvent. Since the mall owner only filed bankruptcy as an attempt to gain leverage over Dillard’s it was a considered a filing done in bad faith and was dismissed.