Because the industrial actual property market undergoes seismic shifts ensuing from the rise of on-line retailing, the COVID-19 pandemic, the expansion in work-from-home choices for workers and employers, and the persevering with evolution of how we do enterprise as a nation, firms could discover themselves in conditions the place their tenant or their landlord has filed for chapter safety. Questions then shortly come up, similar to if and the way a landlord could evict a bankrupt tenant, whether or not a bankrupt tenant could stay as a lessee and proceed to occupy the premises, and the right way to measure damages for a landlord on this state of affairs, each earlier than chapter and going ahead post-petition. The Chapter Code and associated case regulation handle these factors.
Underneath the Chapter Code, a debtor has the correct to elect to imagine or reject executory contracts, similar to unexpired leases for actual property. 11 U.S.C. §365. A debtor with operations in a number of areas could, if accepted by the Chapter Courtroom, assume leases for areas the place the lease is reasonably priced (within the case of a tenant debtor) or worthwhile (within the case of a landlord debtor), and the place it makes enterprise sense to proceed the lease. The debtor could reject leases for these areas the place that’s not the case.
