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

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.