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.
