Saturday, 9 May 2020

Gap sued for unpaid rent on NYC store




San Francisco-based fashion retailer Gap, Inc. has been sued by 48th Americas LLC, the landlord of its store at 1212 Avenue of the Americas, New York City, for failing to pay rent for April and May.

According to the landlord of the store near Times Square, the company has also failed to pay for water charges and snow removal, leading to a total unpaid bill of $530,334.

In addition, the filing made in Manhattan federal court on Monday requests that Gap pay at least $20,000 in attorney fees.

As part of the measures being taken by Gap to deal with the unprecedented financial challenges presented by the ongoing coronavirus pandemic, the company said last month that it had suspended about $115 million in rent payments for its North American stores.

Towards the end of April, Gap acknowledged that it could face accusations of default from its landlords as it attempted to renegotiate leases and continued to suspend rent payments. However, the retailer said that it believed it had “strong legal grounds” to support its claim that it was not obliged to pay rent on stores that had been closed due to “the governmental and public health authority orders” issued because of the Covid-19 crisis.

48th Americas’ filing against Gap is yet another sign of the problems that retailers are facing because of the ongoing coronavirus crisis.

With widespread temporary store closures in place since March, many U.S. retailers have resorted to mass furloughs and salary cuts, as well as the suspension of quarterly cash dividends, share repurchases and even rent payments in order to maintain their liquidity during the pandemic.

Overall, disruptions related to Covid-19 are expected to result in a 5.1% decrease in U.S. retail spending in 2020.

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