What Rights and Possible Exposure to Consequences Arise for Tenants When a Real Property Lease is Rejected by a Bankrupt Landlord?
Section 365(h) of the Bankruptcy Code provides special protection for non-debtors who have rights as tenants if a trustee or Chapter 11 debtor landlord rejects an unexpired lease. The lessee/tenant has the option of retaining possession of the leased premises. That said, it is not entirely clear what [...]
Temporary Pandemic-Related Bankruptcy Code Provisions
Bankruptcy Code provisions temporarily applied because of the COVID-19 pandemic. The Means for Monthly Income Calculation Individual debtor’s disposable income cannot exceed a certain level and the debtor’s expenses must be reasonable and necessary to meet the threshold to qualify under Chapter 7. Nevertheless, under the CARES Act an [...]
Retention of Bankruptcy Debtor’s Property After Bankruptcy Is Not a Violation of the Automatic Stay
The Supreme Court finally settled a long-standing question as to whether a creditor is required to return property of a debtor after bankruptcy has been filed. The answer is that a creditor can continue to retain possession over property of the debtor and such retention is not in violation of [...]
Bankruptcy Court Rules that Eviction Moratorium for COVID Does Not Apply in Bankruptcy
In a case of first impression, the Bankruptcy Court for the Central District of California, Los Angeles Division, issued a recent opinion in In re Nikolay Machevsky, No. 14-29611 (Bankr. C.D. Cal. Jan 8, 2021), ordering a debtor to be evicted from his residence because he did not qualify for [...]
Temporary Extension of Time for Debtor-Tenants to Decide Whether to Assume or Reject Certain Leases
On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act of 2021 (CAA). The CAA includes a temporary extension for debtor-tenants to assume or reject certain leases. Section 365 deals with the assumption and/or rejection of residential and non-residential leases when a debtor files bankruptcy. Section 365(d)(4) [...]
The Effect of the COVID Act on the Bankruptcy Preference Laws
The “Consolidated Appropriations Act, 2021” (“COVID Act”) effective December 27, 2020 amends Section 547 of the Bankruptcy Code and protects suppliers and landlords through agreement to defer payments made after March 13, 2020. Specifically, an agreement entered into on or after March 13, 2020 to defer or postpone payments under [...]
Commercial Landlord Tenant Issues in Bankruptcy — Especially During the Pandemic
Introduction Commercial tenants are defaulting at a faster rate due to the pandemic. But whether we are in a pandemic or not, commercial landlords need to know what to do if their tenants file bankruptcy be it Chapter 7 (liquidation) or Chapter 11 (reorganization). In this regard, the landlord [...]
UPDATE: COVID-19, Business Interruption, and Insurance Coverage
A recent opinion, Urogynecology Specialist of Florida v. Sentinel Insurance Company, LTD., (M.D. Fla. Sept. 24, 2020) 6:20-cv-1174-ORL-22EJK, sheds light on approaches to COVID-19 and the 2020 Shutdown -- and the impact to business. The United States District Court for the Middle District of Florida refused to dismiss a COVID-19 [...]
Contractual Obligations, Force Majeure, and COVID-19
At this point it is premature to determine how Texas courts will decide the breadth and applicability of a force majeure clause related to COVID-19 . That said, do not expect courts to allow a party to invoke force majeure if the event was not specifically identified and especially [...]
The Necessity for Co-Tenancy and Other Related Clauses
The retail apocalypse began long before COVID-19 . With many retailers already over-leveraged and shopping patterns changing, retailers were already shuttering stores, seeking a reduction in rent and/or filing bankruptcy. Afterall, many major retailers including anchor tenants like Sears, had already filed bankruptcy. COVID-19 has merely sped up the process. [...]
