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Delaware Bankruptcy Litigation Information on Corporate Bankruptcy Proceedings in Delaware and Throughout the United States

Category Archives: Commercial Landlords

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Can the landlord apply the tenant’s security deposit to the landlord’s claims?

Posted in Commercial Landlords

Security deposits are considered property of the bankruptcy estate, and as such, are generally required to be returned to the debtor.  Even so,  landlords are permitted in certain instances to setoff their rejection damage claim against the security deposit.  This benefits a landlord for two reasons.  First, instead of returning the deposit to the debtor-tenant,… Continue Reading

When can a landlord recover attorneys’ fees from a tenant in bankruptcy?

Posted in Commercial Landlords

Landlords may be able to recover attorneys’ fees incurred when a debtor-tenant seeks to assume the lease, or assume and assign the lease to a third party.  To recover attorney’s fees, however, the landlord must meet several criteria.  First, the lease must expressly state that the landlord is entitled to recover attorneys’ fees as additional… Continue Reading

What are the landlord’s rights when the tenant assumes and assigns the lease to a third-party?

Posted in Commercial Landlords

In conjunction with assuming the lease,  the Bankruptcy Code allows the debtor-tenant to assign the lease to a third party.  The party who is assigned the lease must provide the landlord with adequate assurance that it can meet the financial obligations of the lease.  If the party who is assuming the lease cannot provide the… Continue Reading

What are the landlord’s rights when the debtor-tenant decides to assume the lease?

Posted in Commercial Landlords

Assumption of the lease is permissible even if the terms of the lease expressly prohibit assumption.  Section 365 of the Bankruptcy Code requires a debtor-tenant to meet certain criteria in order to “assume” a lease.  First, and most importantly, the tenant must cure any and all existing defaults, both monetary and non-monetary.  Second, the debtor-tenant… Continue Reading

What are a Landlord’s “Rejection Damages?”

Posted in Commercial Landlords

If the debtor-tenant seeks to terminate and surrender the lease, that is “reject it”, the landlord may be entitled to a “rejection damage” claim.  A landlord is not entitled to the full amount of unpaid obligations for the balance of the lease.  Instead, Section 502(b)(6) limits the recovery a landlord may receive for “rejection damages.”… Continue Reading

What is the Status of a Tenant’s Rental Obligations While Landlord is in Bankruptcy?

Posted in Commercial Landlords

Section 365(d) of the Bankruptcy Code requires the debtor-tenant to satisfy all the terms under the lease during the post petition period until the tenant either rejects the lease, or assumes and assigns it to a third-party.  The landlord’s claim for unpaid rent receives “administrative claim” status, which is a higher priority of claim than… Continue Reading

How does the “automatic stay” of the bankruptcy code apply to landlords?

Posted in Commercial Landlords

The automatic stay is one of the most powerful protections provided to debtors in a bankruptcy proceeding.  The stay acts as an injunction that prohibits creditors (including landlords) from commencing or continuing any proceeding against the debtor which could have been commenced prior to the bankruptcy.  Applied to landlords, the automatic stay prohibits efforts to… Continue Reading

Shopping Centers Receive Preferred Treatment Under the Bankruptcy Code

Posted in Commercial Landlords

Introduction When a company files for bankruptcy, often it will reject some or all of its commercial leases. Alternatively, some debtors in bankruptcy choose to assume and assign their leases to third parties. By assigning its lease, the debtor is in essence selling its lease to the highest bidder. Large retailers who file for bankruptcy… Continue Reading

Ten Things Every Commercial Landlord Should Know About a Tenant in Bankruptcy

Posted in Commercial Landlords

As the economy fluctuates, tenant bankruptcies become a greater risk for commercial landlords. Yet some landlords are not familiar with the rights provided to them under the Bankruptcy Code, nor are they aware of the protections provided to a tenant in bankruptcy. For example, certain lease provisions are unenforceable once a tenant files for bankruptcy.… Continue Reading