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Retail and Restaurant Bankruptcies: Current Issues for Debtors, Landlords, and Vendors

Assumption or Rejection of Leases, Franchise Agreements, Gift Cards, Consignment Rights, and Going-Out-of-Business Sales

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

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, February 17, 2021

Recorded event now available

or call 1-800-926-7926

This CLE course will provide counsel with the tools to address the specific issues that arise during retail and restaurant bankruptcies. The panel will review topics related to leases and other executory contracts, franchise agreements, vendor rights, gift cards, and the many other issues unique to retail and restaurant insolvencies.


Retailers and restaurants are filing bankruptcy at an alarming rate that is expected to continue. The 2020 pandemic has exponentially accelerated, changing consumer preferences toward online shopping and food delivery services. Government mandates and shutdowns have altered the conventional analysis. Counsel for debtor retailers must, before filing for bankruptcy, take into account how quickly certain decisions about the assumption or rejection of leases must be made--only 210 days--and how quickly lenders will demand a plan--90 to 120 days--or threaten liquidation.

But courts and debtors have been quick with novel remedies to these unprecedented matters. Courts have "suspended" some cases and prohibited payment of all but the essential expenses. At least one court has abated rent due to the ongoing pandemic.

Still, retailers must decide whether to continue to honor gift cards, loyalty program points, and other customer incentives post-petition, subject to many restrictions and conditions. Retailers must also factor in consignment arrangements where a vendor has delivered goods but retains title pending sale to a third party. Also, vendors often assert that their claims have priority under Section 503(b)(9) of the Bankruptcy Code.

Similarly, large restaurant chains often seek to reject unprofitable leases under Section 365(a). In contrast, other restaurant owners aim to keep existing leases post-petition by requesting an extension for performance for up to 60 days under Section 365(d)(3). All parties must consider the effect of trusts under the Perishable Agricultural Commodities (PACA) and Packers and Stockyards (PSA) Acts.

Whether the debtor is a franchisee or franchisor, bankruptcy affords many options to resolve franchise agreement assignment and intellectual property issues. In this context, savvy counsel must carefully advise clients on clearly presenting information about assets, liabilities, and other financial affairs while strategically negotiating with significant stakeholders.

Listen as our authoritative panel discusses how to best guide retail or restaurant clients through a bankruptcy proceeding, all while deploying every available tool to maximize the value of inventory and assets, protect the client's equity, and preserve long term customer goodwill.



  1. The upswing in retail and restaurant bankruptcies
  2. Assumption and rejection of leases: treatment of rent pre- and post-petition
  3. Customer incentives post-petition: gift cards and loyalty programs
  4. Vendors: consignment, stay relief, and other issues
  5. Inventory and going out of business sales
  6. Future trends and miscellaneous issues


The panel will review these and other key issues:

  • What is the procedure and timing for assuming or rejecting leases in bankruptcy?
  • What steps may vendors take to protect their rights to consigned goods?
  • What are some of the constraints on going-out-of-business sales, and how are they resolved in bankruptcy?
  • What novel approaches are being developed to deal with the pandemic?


Lucas, John W.
John W. Lucas

Pachulski Stang Ziehl & Jones

Mr. Lucas represents debtors, creditors' committees, creditors, and trustees in chapter 11 cases and companies in...  |  Read More

Stratton, Teri
Teri Stratton

Managing Director, Restructuring Group, TRS Advisors
Piper Sandler

Ms. Stratton has significant experience providing debt advisory, equity private placements, capital markets, mergers...  |  Read More

Tibus, Jonathan
Jonathan Tibus

Managing Director
Alvarez & Marsal

Mr. Tibus specializes in developing, evaluating, and implementing performance improvement and restructuring plans for...  |  Read More

Trache, Dylan
Dylan Trache

Nelson Mullins Riley & Scarborough

Mr. Trache focuses his practice in bankruptcy and financial restructuring. He has experience representing Chapter 11...  |  Read More

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