Boatworks at Tahoe LLC, owner of a shopping mall and hotel on Lake Tahoe's North Shore, has filed for Chapter 11 bankruptcy protection to stop a foreclosure auction that had been scheduled for Aug. 12.

The filing marks another chapter in the long struggle of American shopping malls, which began losing customers to internet sales and e-commerce in the 1990s and were hit even harder by shutdowns during the Covid-19 pandemic. Retail has recovered only slowly over the last six years.

Boatworks at Tahoe files for bankruptcy

The Tahoe City, Calif., owner of Boatworks Mall and the adjacent 34-room Inn at Boatworks filed its petition on Aug. 11 in the U.S. Bankruptcy Court for the Eastern District of California (court filing), listing $10 million to $50 million in assets and debts.

Citizens National Bank of Texas filed a notice of default against Boatworks at Tahoe in January on its $14.4 million loan, after the debtor failed to pay property taxes and provide proof of insurance. The debtor is managed by San Francisco firm MJD Capital Partners, according to SFGate.

"Staying open is crucial for the business, the employees, and the community," MJD Capital Partners' Marie Murphy said in a statement. "A Chapter 11 reorganization of the LLC that owns this iconic project legally prevents foreclosure while the business restructures."

Bankruptcy halts legal action

MJD's Chapter 11 filing invokes an automatic stay on all legal actions against the debtor while the bankruptcy case proceeds. The debtor plans to remain open while it reorganizes its assets in bankruptcy.

Chapter 11 also sets a court-supervised path forward: the debtor must eventually win approval of a reorganization plan to exit bankruptcy. The foreclosure auction cannot proceed unless a judge agrees to lift the stay, relief that secured lenders may seek if they argue their collateral is not adequately protected.

"We continue to believe a mixed-use redevelopment is the best way to revitalize Boatworks and preserve its unique character," Murphy said. "Foreclosure would be a major blow to the area. For over four decades, Boatworks has been Tahoe City's place to be. With this reorganization, we intend to continue our efforts to ensure that legacy continues."

Owner planned property redevelopment

MJD purchased the property in 2019 with plans to rebuild it. In 2024, the developer planned to demolish the property, with a replacement that included an 80-room hotel, 31 condominiums, and 8,000 square feet of retail space, but the project never proceeded.

That mixed-use blueprint mirrors a broader shift among U.S. mall owners, who have increasingly reimagined struggling shopping centers as developments pairing housing and hotels with smaller retail footprints.

Under the planned redevelopment, the mall's retail would have been moved closer to street level and away from the adjacent marina, according to Katherine Hill, executive director of the Tahoe City Downtown Association.

"Our board is committed to supporting our businesses in Tahoe City. We see the Boatworks Mall as an important part of our community," Hill told SFGate.

Boatworks Mall consists of a mix of retail, office, and non-profit operations. Tenants include women's boutique Camila's at Tahoe, resort wear shop The Lucky Horseshoe, Steve Schmier's Jewelry, the Tahoe City Chocolates candy shop, Acorn Home Furnishings and Design, souvenir shops Tahoe T-Shirtery and Tahoe Boho, makeup and eyelash shops, and training and yoga studios.

The upscale mall also houses The Snow Sports Museum and the Placer County Library Tahoe City branch, as well as an architectural firm and a general construction contractor.

The Inn at Boatworks opened in 1958, and the mall opened 20 years later, in 1978.

Another upscale mall files bankruptcy

Boatworks isn't the only upscale mall facing financial issues. Blackhawk Plaza in Danville, Calif., filed for Chapter 11 protection in the U.S. Bankruptcy Court for the Central District of California in March amid defaulted loans and lawsuits.

Blackhawk Plaza had served the upscale Danville community with high-end retail tenants and restaurants until many began closing following the Covid-19 pandemic. Investment firm The Ramanujan Group LLC purchased the shopping center at the height of the Covid-19 pandemic in 2020 for $28.3 million. The debtor defaulted on loans totaling $28 million and $3 million from Preferred Bank and $5 million from Nano Bank, according to SiliconValley.com.

This story was originally published by TheStreet on Aug. 13, 2026, where it first appeared in the Retail section.