Gap Ordered by Court to Pay $24 Million in Back Rent

Gap Inc. (San Francisco) has lost its battle to forego paying $24 million in back rent.

The dispute with its landlord dates to May 2020 when The Gap and Old Navy stopped paying required rent for their two flagship retail spaces in Times Square. The company then sued the landlord in June 2020 to break the lease agreements, arguing that a modification of the leases was required as a result of the pandemic and related closure orders.

In August 2021, the Supreme Court of New York ordered Gap to pay the $24 million in back rent, though it was granted a 10% percent reduction due to the “extraordinary circumstances” of the pandemic, according to The Real Deal.

The company appealed the decision, but it was ruled against for the second time last week.

The landlord was represented by the Rosenberg & Estis law firm in New York. In an announcement on its website, the firm said:

“The Court’s ruling is a significant victory for commercial landlords, as it undermines tenant claims that COVID closure orders and limited-use policies mandated under pandemic executive orders allow tenants either to defer, or altogether avoid, the obligation to pay rent, or use-and-occupancy payments.”

The Gap’s store has stayed open throughout the legal dispute. Old Navy’s store has been closed but will reopen later this year.