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Contingencies | 3 Months Ended
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Mar. 31, 2021
Commitments And Contingencies Disclosure [Abstract] |
Contingencies | Note 12 – Contingencies Litigation In April 2019, the Company entered into a settlement agreement and release with respect to the class action lawsuit filed on March 16, 2016 in the United States District Court for the Middle District of Florida by Wave Lengths Hair Salons of Florida, Inc. d/b/a Salon Adrian. As of May 4, 2021, $8,422 in tenant credits related to the settlement agreement remain outstanding and are expected to expire on or before December 31, 2024. The Company received document requests in the third quarter of 2019, in the form of subpoenas, from the Securities and Exchange Commission and the Department of Justice regarding the Wave Lengths Hair Salons of Florida, Inc. litigation and other related matters. The Company cooperated in these matters and has been advised by the Securities and Exchange Commission and the Department of Justice that the agencies have closed their investigations. Securities Litigation The Company and certain of its officers and directors were named as defendants in three putative securities class action lawsuits (collectively, the “Securities Class Action Litigation”), each filed in the United States District Court for the Eastern District of Tennessee, on behalf of all persons who purchased or otherwise acquired the Company’s securities during a specified period of time. Those cases were consolidated on July 17, 2019, under the caption In re CBL & Associates Properties, Inc. Securities Litigation, 1:19-cv-00149-JRG-CHS. The complaints filed in the Securities Class Action Litigation allege violations of the securities laws, including, among other things, that the defendants made certain materially false and misleading statements and omissions regarding the Company’s contingent liabilities, business, operations, and prospects during the periods of time specified above. The plaintiffs seek compensatory damages and attorneys’ fees and costs, among other relief, but have not specified the amount of damages sought. The outcome of these legal proceedings cannot be predicted with certainty. A notice of suggestion of bankruptcy was filed by the Company in this litigation on November 9, 2020. Certain of the Company’s current and former directors and officers were named as defendants in nine shareholder derivative lawsuits (collectively, the “Derivative Litigation”). On June 4, 2019, a shareholder filed a putative derivative complaint captioned Robert Garfield v. Stephen D. Lebovitz et al., 1:19-cv-01038-LPS, in the United States District Court for the District of Delaware (the “Garfield Derivative Action”), purportedly on behalf of the Company against certain of its officers and directors. On June 24, 2019, September 5, 2019 and September 25, 2019, respectively, other shareholders filed three additional putative derivative complaints, each in the United States District Court for the District of Delaware, captioned as follows: Robert Cohen v. Stephen D. Lebovitz et al., 1:19-cv-01185-LPS (the “Cohen Derivative Action”); Travis Lore v. Stephen D. Lebovitz et al., 1:19-cv-01665-LPS (the “Lore Derivative Action”), and City of Gainesville Cons. Police Officers’ and Firefighters Retirement Plan v. Stephen D. Lebovitz et al., 1:19-cv-01800 (the “Gainesville Derivative Action”), each asserting substantially similar claims purportedly on behalf of the Company against similar defendants. The Court consolidated the Garfield Derivative Action and the Cohen Derivative Action on July 17, 2019, under the caption In re CBL & Associates Properties, Inc. Derivative Litigation, 1:19-cv-01038-LPS (the "Consolidated Derivative Action"). On July 25, 2019, the Court stayed proceedings in the Consolidated Derivative Action pending resolution of an eventual motion to dismiss in the Securities Class Action Litigation. On October 14, 2019, the parties to the Gainesville Derivative Action and the Lore Derivative Action filed a joint stipulation and proposed order confirming that each of those cases is subject to the consolidation order previously entered by the Court in the Consolidated Derivative Action and that further proceedings in those cases are stayed pending resolution of an eventual motion to dismiss in the Securities Class Action Litigation. On July 22, 2019, a shareholder filed a putative derivative complaint captioned Shebitz v. Lebovitz et al., 1:19-cv-00213, in the United States District Court for the Eastern District of Tennessee (the “Shebitz Derivative Action”); on January 10, 2020, a shareholder filed a putative derivative complaint captioned Chatman v. Lebovitz, et al., 2020-0011-JTL, in the Delaware Chancery Court (the “Chatman Derivative Action”); on February 12, 2020, a shareholder filed a putative derivative complaint captioned Kurup v. Lebovitz, et al., 2020-0070-JTL, in the Delaware Chancery Court (the “Kurup Derivative Action”); on February 26, 2020, a shareholder filed a putative derivative complaint captioned Kemmer v. Lebovitz, et al., 1:20-cv-00052, in the United States District Court for the Eastern District of Tennessee (the “Kemmer Derivative Action”); and on April 14, 2020, a shareholder filed a putative derivative complaint captioned Hebig v. Lebovitz, et al., 1:19-cv-00149-JRG-CHS, in the United States District Court for the Eastern District of Tennessee (the “Hebig Derivative Action”), each asserting substantially similar claims purportedly on behalf of the Company against similar defendants. The actions pending in Delaware Chancery Court have been consolidated into one case, and likewise, the actions pending in Delaware federal court have been consolidated into one case. The Tennessee actions have not been consolidated. On October 7, 2019, the Court stayed the Shebitz Derivative Action, pending resolution of an eventual motion to dismiss in the related Securities Class Action Litigation; the Company expects the other Derivative Actions to be stayed as well. The complaints filed in the Derivative Litigation allege, among other things, breaches of fiduciary duties, unjust enrichment, waste of corporate assets, and violations of the federal securities laws. The factual allegations upon which these claims are based are similar to the factual allegations made in the Securities Class Action Litigation, described above. The complaints filed in the Derivative Litigation seek, among other things, unspecified damages and restitution for the Company from the individual defendants, the payment of costs and attorneys’ fees, and that the Company be directed to reform certain governance and internal procedures. The outcome of these legal proceedings cannot be predicted with certainty. A notice of suggestion of bankruptcy was filed by the Company in this litigation on November 9, 2020. The Company's insurance carriers have been placed on notice of these matters. The Company is currently involved in certain other litigation that arises in the ordinary course of business, most of which is expected to be covered by liability insurance. Management makes assumptions and estimates concerning the likelihood and amount of any potential loss relating to these matters using the latest information available. The Company records a liability for litigation if an unfavorable outcome is probable and the amount of loss or range of loss can be reasonably estimated. If an unfavorable outcome is probable and a reasonable estimate of the loss is a range, the Company accrues the best estimate within the range. If no amount within the range is a better estimate than any other amount, the Company accrues the minimum amount within the range. If an unfavorable outcome is probable but the amount of the loss cannot be reasonably estimated, the Company discloses the nature of the litigation and indicates that an estimate of the loss or range of loss cannot be made. If an unfavorable outcome is reasonably possible and the estimated loss is material, the Company discloses the nature and estimate of the possible loss of the litigation. Based on current expectations, such matters, both individually and in the aggregate, are not expected to have a material adverse effect on the liquidity, results of operations, business or financial condition of the Company. Environmental Contingencies The Company evaluates potential loss contingencies related to environmental matters using the same criteria described above related to litigation matters. Based on current information, an unfavorable outcome concerning such environmental matters, both individually and in the aggregate, is considered to be reasonably possible. However, the Company believes its maximum potential exposure to loss would not be material to its results of operations or financial condition. The Company has a master insurance policy that provides coverage through 2022 for certain environmental claims up to $10,000 per occurrence and up to $50,000 in the aggregate, subject to deductibles and certain exclusions. At certain locations, individual policies are in place. Guarantees The Operating Partnership may guaranty the debt of a joint venture primarily because it allows the joint venture to obtain funding at a lower cost than could be obtained otherwise. This results in a higher return for the joint venture on its investment, and a higher return on the Operating Partnership's investment in the joint venture. The Operating Partnership may receive a fee from the joint venture for providing the guaranty. Additionally, when the Operating Partnership issues a guaranty, the terms of the joint venture agreement typically provide that the Operating Partnership may receive indemnification from the joint venture partner or have the ability to increase its ownership interest. The guarantees expire upon repayment of the debt, unless noted otherwise. The following table represents the Operating Partnership's guarantees of unconsolidated affiliates' debt as reflected in the accompanying condensed consolidated balance sheets as of March 31, 2021 and December 31, 2020:
|  | As of March 31, 2021 |  |  | Obligation recorded to reflect guaranty |
Unconsolidated Affiliate |  | Company's Ownership Interest |  |  | Outstanding Balance |  |  | Percentage Guaranteed by the Operating Partnership |  |  |  | Maximum Guaranteed Amount |  |  | Debt Maturity Date (1) |  |  | March 31, 2021 |  |  | December 31, 2020 |
West Melbourne I, LLC - Phase I |  | 50% |  |  | $ | 39,944 |  |  | 50% |  |  |  | $ | 19,972 |  |  | Feb-2025 | (2) |  | $ | 200 |  |  | $ | 201 |
West Melbourne I, LLC - Phase II |  | 50% |  |  |  | 14,316 |  |  | 50% |  |  |  |  | 7,158 |  |  | Feb-2025 | (2) |  |  | 72 |  |  |  | 72 |
Port Orange I, LLC |  | 50% |  |  |  | 52,898 |  |  | 50% |  |  |  |  | 26,449 |  |  | Feb-2025 | (2) |  |  | 264 |  |  |  | 266 |
Ambassador Infrastructure, LLC |  | 65% |  |  |  | 8,250 |  |  | 100% |  |  |  |  | 8,250 |  |  | Mar-2025 |  |  |  | 83 |  |  |  | 94 |
Shoppes at Eagle Point, LLC |  | 50% |  |  |  | 34,435 |  |  | 35% |  | (3) |  |  | 12,740 |  |  | Oct-2021 |  |  |  | 127 |  |  |  | 127 |
EastGate Storage, LLC |  | 50% |  |  |  | 6,500 |  |  | 50% |  | (4) |  |  | 3,250 |  |  | Dec-2022 |  |  |  | 33 |  |  |  | 33 |
Self Storage at Mid Rivers, LLC |  | 50% |  |  |  | 5,939 |  |  | 50% |  | (4) |  |  | 2,994 |  |  | Apr-2023 |  |  |  | 30 |  |  |  | 30 |
Parkdale Self Storage, LLC |  | 50% |  |  |  | 6,318 |  |  | 100% |  | (5) |  |  | 6,500 |  |  | Jul-2024 |  |  |  | 65 |  |  |  | 65 |
Hamilton Place Self Storage, LLC |  | 54% |  |  |  | 6,668 |  |  | 50% |  | (4) |  |  | 3,501 |  |  | Sep-2024 |  |  |  | 35 |  |  |  | 35 |
Atlanta Outlet JV, LLC |  | 50% |  |  |  | 4,568 |  |  | 100% |  |  |  |  | 4,568 |  |  | Nov-2023 |  |  |  | — |  |  |  | — |
Louisville Outlet Shoppes, LLC |  | 50% |  |  |  | 8,752 |  |  | 100% |  |  |  |  | 8,752 |  |  | Oct-2021 |  |  |  | — |  |  |  | — |
Total guaranty liability |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | $ | 909 |  |  | $ | 923 |
(1) | Excludes any extension options.
(2) | These loans have a one-year extension option at the joint venture’s election.
(3) | The guaranty is for a fixed amount of $12,740 throughout the term of the loan, including any extensions. The loan has a one-year extension option, at the joint venture’s election, for an outside maturity date of October 2022.
(4) | Subject to the bankruptcy default being waived, the guaranty may be reduced to 25% once certain debt and operational metrics are met.
(5) | The guaranty was increased to 100% as a result of the Chapter 11 Cases filed by the Company.
As described in Note 2, the filing of the Chapter 11 Cases also constituted an event of default with respect to certain property-level debt of the Operating Partnership’s subsidiaries, which may have resulted in automatic acceleration of certain monetary obligations or may give the applicable lender the right to accelerate such amounts. As of March 31, 2021,there is a default under each of the guaranteed loans above as a result of the filing of the Chapter 11 Cases, except for Ambassador Infrastructure, LLC, Louisville Outlet Shoppes, LLC, Port Orange I, LLC, Shoppes at Eagle Point, LLC, West Melbourne I, LLC – Phase I and West Melbourne I, LLC – Phase II. The Company has guaranteed the lease performance of York Town Center, LP ("YTC"), an unconsolidated affiliate in which the Company owns a 50% interest, under the terms of an agreement with a third party that owns property as part of York Town Center. Under the terms of that agreement, YTC is obligated to cause performance of the third party’s obligations as landlord under its lease with its sole tenant, including, but not limited to, provisions such as co-tenancy and exclusivity requirements. Should YTC fail to cause performance, then the tenant under the third-party landlord’s lease may pursue certain remedies ranging from rights to terminate its lease to receiving reductions in rent. The Company has guaranteed YTC’s performance under this agreement up to a maximum of $22,000, which decreases by $800 annually until the guaranteed amount is reduced to $10,000. The maximum guaranteed obligation was $10,800 as of March 31, 2021. The Company entered into an agreement with its joint venture partner under which the joint venture partner has agreed to reimburse the Company 50% of any amounts it is obligated to fund under the guaranty. The Company did not record a credit loss related to this guaranty for the three months ended March 31, 2021 and March 31, 2020. For the three months ended March 31, 2021 and March 31, 2020, the Company evaluated each guaranty, listed in the table above, individually by looking at the debt service ratio, cash flow forecasts, the performance of each loan and, where applicable, the collateral value in relation to the outstanding amount of the loan. The result of the analysis was that each loan is current, performing and, where applicable, the collateral value was greater than the outstanding amount of the loan. The Company did not record a credit loss related to the guarantees listed in the table above for the three months ended March 31, 2021 and March 31, 2020. Performance Bonds The Company has issued various bonds that it would have to satisfy in the event of non-performance. The total amount outstanding on these bonds was $412 at March 31, 2021 and December 31, 2020.

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