Commercial Leases In Economic Distress: Pre- and Post-Bankruptcy Strategies for Landlords

Negotiating Lease Modifications With Distressed Tenants, Participating in the Bankruptcy Process

Recording of a 90-minute premium CLE webinar with Q&A


Conducted on Thursday, June 11, 2020

Recorded event now available

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Program Materials

This CLE webinar will guide landlord's counsel in handling the critical legal issues that arise before and after a tenant files for bankruptcy. The panel will outline strategies for commercial landlords to protect their interests and maximize recovery under state law and the Bankruptcy Code.

Description

The COVID-19 pandemic and related state and local mandates are forcing retail and other businesses nationwide to close or alter their business practices indefinitely. The financing and aid packages created under the CARES Act may offer short-term relief, but many companies will eventually wind up in bankruptcy. Commercial landlords must prepare now to cope with past-due rents and soaring vacancies and seek ways to protect their financial interests.

The Bankruptcy Code offers protection to both landlords and tenants but raises several complex legal issues. The tenant's primary concern is the assumption or rejection of the lease under Chapter 11. However, legal advisers must carefully consider the timing and implications of such decisions (including locations impacted).

There are strategies available to the landlord that can minimize losses before or after a bankruptcy filing. They may include negotiating a rent abatement or other modification of the lease, or participating in the creditor's committee in bankruptcy. It may also have setoff rights concerning deposits held under the lease.

Listen as our authoritative panel of real estate and bankruptcy attorneys highlights critical legal issues that arise for landlords before and after a tenant files for bankruptcy. The panel will offer their perspectives on best practices for commercial landlords to protect their interests and maximize recovery under state law and the Bankruptcy Code.

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Outline

  1. Commercial tenant COVID-19 rent relief agreements and bankruptcy: current trends
  2. Legal issues arising when a commercial tenant files for bankruptcy
    1. Automatic stay
    2. Ipso facto clauses
    3. Assumption or rejection of a lease
    4. Anti-assignment lease provisions
    5. Post-petition performance
    6. Proofs of claim
  3. Best practices for mitigating the risk of loss
    1. Pre-petition rent relief, repossession, or termination of the lease
    2. Enforce rights to receive current rent before bankruptcy or to compel post-petition rent payment or obtain relief from stay to repossess premises
    3. Security deposit setoffs and draws on letters of credit
    4. Get appointed to creditors' committee
    5. Strategies when beginning a lease

Benefits

The panel will review these and other key questions:

  • What trends are developing in commercial tenant leases as a result of the current economic crisis?
  • What provisions should landlords consider in negotiating and drafting leases or lease modifications to protect against potential losses due to tenant bankruptcy?
  • What rights does the Bankruptcy Code give commercial landlords and tenants?
  • What are the best and most cost-effective practices for a commercial landlord to pursue when a tenant files for bankruptcy protection?

Faculty

Kim, C. Jason
C. Jason Kim

Counsel
White and Williams

Mr. Kim focuses his practice on real estate and finance transactions. He advises clients on matters involving...  |  Read More

Ostrow, Steven
Steven E. Ostrow

Partner
White and Williams

For more than 30 years, Mr. Ostrow has represented parties in commercial leasing and sales transactions and in...  |  Read More

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