Fashion Square Mall Files for Bankruptcy to Avoid Foreclosure

by San Antonio Attorney

Owners of the Fashion Square Mall filed for bankruptcy, blaming The Bancorp for discontinuing its financial support for a renovation.

The Chapter 11 bankruptcy petition automatically stops a foreclosure suit filed by The Bancorp against the mall, which claimed that the owner of the mall defaulted on its $42.2 million loan.

According to bankruptcy papers, the mall owner, an associate of UP Development in Tennessee, stopped the loan payments because it found out that the lender was giving false accounts of the improvement plans. However, the bank has accused UP of blatantly mismanaging the mall and did not pay taxes.

A lawyer for Fashion Square Mall, which is remains open, says it is going to continue its operations and pursue new stores, a hotel and other big improvements.

UP Development, which is a retail developer in Southeastern and Midwestern U.S., was negotiating with Starwood Hotels to construct a hotel around the 1970s-era shopping center. The plans include replacing the former Sears store with a hardware store.

UP Development claims the Bancorp promised to finance the hotel and other improvements, and, as early as September 2016, was still conferring with the developers regarding new hotels and apartments in the area.

In 2013, UP Development acquired an estimated the mall and the properties surrounding it.

Since purchasing the mall, Dick’s Sporting Goods has opened a store and the developer sold a nearby lot, where an apartment complex will be built.

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