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        sixty days.  In re CEC Entm't, Inc.,    The Automatic Stays Stops All Actions   landlords to enforce, collect, or recover
        625 B.R. 344, 352–53 (Bankr. S.D.    Against the Tenant 11 USC 362       a claim from the debtor are stopped by
        Tex. 2020).                            At the commencement of bankruptcy,   the automatic stay. Further, any act to
           In the Summer of 2020, in J.C.    the landlord should be aware that   obtain possession of leased space or
        Penny Co., Inc., the debtor also request-  the filing triggers the automatic stay,   exercise control over premises of the
        ed a rental payment extension arising   which bars all actions taken by credi-  estate stays. In other words, a landlord
        within sixty days of the petition date.    tors against the tenant, also known as   could face penalties for enforcing, col-
        Effectively, requesting an additional   the debtor. Under Section 362 of the   lecting, or recovering past due rents or
        sixty days to pay rent. Nevertheless,   Bankruptcy Code, any attempts by the     attempting to evict a bankrupt tenant.
        after the first extension, the Court did
        not allow any further extensions on
        rental payment performance.

        Pre-bankruptcy Communications
        Decrease Problems
           Both the debtors in Neiman Marcus
        and Belk contacted creditors months
        ahead of the bankruptcy filings. In
        Neiman Marcus, months before filing,
        the debtor contacted the landlords to
        negotiate payments and obtain rent
        concessions.  The pre-bankruptcy
        communication resulted in savings of
        millions of dollars for the debtor and
        the landlords.
           To date, the fastest bankruptcy is
        Belk, which reorganized in just 24
        hours.  In preparation for its prepack-
        aged filing, the debtor negotiated
        with 90,000 creditors including
        landlords. Prior negotiation efforts
        protected not only the debtors but
        also the landlords.

        Letters of Credit Increase the Landlord’s
           Letters of Credit may protect a
        landlord from a tenant’s default.
        Letters of Credit provide independent
        security for tenant rent. It can also
        provide greater security than a guar-
        anty or a security deposit, because
        it is a source of additional collateral.
        Created under Article 5 of the Texas
        Business and Commerce Code, a third
        party, such as a bank, issues a letter
        of credit for the benefit of the tenant
        to the landlord. Letters of Credit are
        often noted in asset and purchase
        agreements. Letters of credit require
        at least three parties. One being the
        financing entity, usually a bank that
        issues the letters of credit. Next, the
        tenant or the party is required to have
        a letter of credit. Lastly, there is the
        landlord, or the party requiring the
        tenant(s) to have letters of credit.

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