Monday, February 01, 2021

Temporary Extension of Time for Debtor-Tenants to Decide Whether to Assume or Reject Certain Leases

By Bill Siegel


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) of the Bankruptcy Code, requires a debtor-tenant within 120 days after the bankruptcy filing to assume or reject a nonresidential real estate lease, subject to an additional 90-day extension upon bankruptcy court approval.  If the bankruptcy court approves the initial extension, then the bankruptcy court may grant a subsequent extension, but only if the debtor obtains the landlord’s prior written consent.

The CAA extends the initial 120-day period within which the debtor-tenant may assume or reject the lease to 210 days.  Moreover, given the fact that prior to the CAA the debtor could seek a 90-day extension, it appears that subject to landlord approval, the debtor could have up to 300 days to assume or reject its non-residential leases. 

 

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