Seventh Circuit Holds That Termination of a Commercial Lease Prior to Tenant’s Bankruptcy May be an “Avoidable Transfer”

King & Spalding

On March 11, 2016, the US Court of Appeals for the Seventh Circuit (the “Court”) ruled that a termination of lease that occurred prior to the tenant’s bankruptcy may be an “avoidable transfer” under title 11 of the United States Code (the “Bankruptcy Code”), thereby allowing the bankruptcy estate to recover the value of the lease from the landlord.

Background and Applicable Statutes -

Prior to filing bankruptcy, Great Lakes Quick Lube LP (the “Debtor”) leased more than 100 oil-change stores. Two of those leases were with T.D. Investments I, LLP (the “Landlord”). Fifty-two days before it filed bankruptcy, the Debtor agreed with the Landlord to terminate the two leases early, even though the leased stores were profitable.

Please see full Alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

Written by:

King & Spalding

King & Spalding on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.