SDNY Chooses “Time Approach” to Calculating Lease Termination Damages Collectible Against a Bankrupt Estate
Financial distress persists in the commercial real estate market, raising the prospects that property owners and landlords could seek relief under chapter 11 of the Bankruptcy Code. The Bankruptcy Code contains numerous...more
When a tenant under an unexpired lease of nonresidential real property files a case under chapter 11 of the Bankruptcy Code, both tenant and landlord acquire rights and obligations that may contravene the terms of the lease...more
Since 1993, decisions out of the U.S. Bankruptcy Court for the Southern District of New York consistently adopted the aggregate “rent approach” for calculating lease rejection damages in bankruptcy proceedings. But in...more
Sometimes the result of even a good business is bankruptcy, particularly as COVID-19 and its economic and regulatory impacts run through plans that were otherwise well-laid. This article provides no advice for a business...more
In these troubled times when lease and other contract defaults, as well as bankruptcies, abound, it may be useful to reexamine what happens to a lease of commercial real estate when it has been terminated in accordance with...more
To prevent landlords under long-term real property leases from reaping a windfall for future rent claims at the expense of other creditors, section 502(b)(6) of the Bankruptcy Code caps the amount of a landlord's claims...more
The Bankruptcy Court for the Eastern District of Michigan recently held, in In re Indiana Hotel Equities, LLC, No. 18-45185 (Bankr. E.D. Mich. June 18, 2018) [ECF No. 47], that the early termination of a lease on...more
Toys “R” Us filed for bankruptcy in September 2017, with hopes that a strong holiday season would facilitate a successful reorganization. ...more
In Wright (and another) (as joint liquidators of SHB Realisations Ltd (formerly BHS Ltd) (in liquidation)) v Prudential Assurance Company Ltd, the court held that, when the BHS CVA terminated, the landlord was entitled to...more
Last year the Seventh Circuit determined that a lease termination constituted a “transfer” within the meaning of the Bankruptcy Code and ordered litigation to continue against a landlord that had entered into a lease...more
There are many tenants that are, shall we say, “problem children.” They pay late, open late, breach, junk up your strip or building, threaten, the works. Sometimes, the landlord finds it easier just to reach a lease...more
A recent decision by the U.S. Court of Appeals for the Seventh Circuit should prompt landlords to give careful consideration before entering into a lease termination agreement with a distressed tenant. In In re Great...more
In March 2016, the U.S. Court of Appeals for the Seventh Circuit ruled that a landlord may be liable to a debtor’s bankruptcy estate for the value of a lease the debtor terminated early, holding the termination may be an...more
Landlords contemplating terminating a lease with a distressed tenant in advance of a possible tenant bankruptcy will want to consider carefully a recent decision from the Seventh Circuit. The decision, In re Great Lakes Quick...more
Landlords dealing with troubled tenants often enter into termination agreements that dictate terms for the consensual terminations of unexpired leases. Among other benefits, such termination agreements provide certainty and...more
In a case of first impression, the Seventh Circuit recently issued an opinion that may cause landlords and their advisors to re-evaluate the consequences of terminating a financially distressed commercial tenant’s lease prior...more
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...more
TRUE LEASE V. DISGUISED SECURITY INTEREST - The characterization of a transaction as either a true “lease” or a secured transaction is likely to impact the putative lessor’s rights and remedies both with respect to the...more
As many commercial landlords can attest based on experience, a tenant that files bankruptcy receives the benefit of rights and protections under the Bankruptcy Code that it would not have outside of bankruptcy. Among other...more
Agri Star Meat & Poultry, LLC v. Nevel Properties Corp. (In re Nevel Properties Corp.), 765 F.3d 846 (8th Cir. 2014) – The purchaser of assets from one bankruptcy debtor objected to the plan of reorganization filed by...more
A commercial landlord sought relief from the automatic stay so that it could complete prepetition eviction proceedings against the debtor. The debtor objected, arguing that it had a right to assume the lease. The case turned...more