Page 11 - NBIZ October 2020

Landlord’s Choices Retroactive Rejection considering the landlord's rights and earmark money exclusively for the 3
landlord; and (5) whether the unexpired
In the past, landlords would usually
expectations as they existed before the
lease is at, or below, the prevailing rate.
be entitled to post-petition rents as
filing of the bankruptcy proceeding.
When a Retail Tenant an administrative claim, which would tors when considering “adequate Therefore, the standard of defining
Courts also look at certain fac-
what qualifies as adequate assurances
mean the landlord would at least be
Files Bankruptcy the date the bankruptcy case was filed debtor's payment history; (2) presence vary on a case by case basis.
paid in full for the rent owed between
for the tenant to assume the lease will
assurance.” These factors are: (1) the
Section 365 requires the debtor
of a security deposit; (3) evidence
and the date the lease was rejected.
to assume and provide adequate
of profitability; (4) plan that would
However, it is becoming more common
for debtors to ask that leases be
rejected retroactively to the bankruptcy
filing date. Debtors have also been
moving more quickly to reject leases.
For instance, in the U. S. Bankruptcy
Court for Delaware, In re Restaurants
Acquisition I, LLC, the Chapter 11
debtor moved to reject multiple leases
upon filing bankruptcy. EMPLOYER
1
By rejecting the abandoned leases on BENEFIT SERVICES
the petition date, the debtor is relieved
of any post-petition administrative
expense claims by the landlord. The
debtor's quick rejection also means it
does not have to pay the landlord its
monthly rent under Section 365(d)(3).
Unfortunately, when that occurs, land-
lords have little to no recourse.
However, the longer a debtor waits PLAN PAYROLL BENEFIT
in a bankruptcy case, the more unlikely ADMINISTRATON MANAGEMENT PACKAGE
it will be that a bankruptcy court will Assistance and research Get your employees MARKETING
grant this retroactive relief. Moreover, to keep you informed paid quickly so you Document
in cases where the debtor is actively and in compliance with can get back to doing administration of
what your company
401(k) and 403(b)
state and federal laws.
using a space and that use is either gen- does best. including employee
erating income or providing a benefit to enrollment assistance.
the estate, it will be hard-pressed to con-
vince a court that retroactive rejection
2
is advisable. A landlord should be aware
of relevant leased-space rights, but this
again will depend on the nature of the
debtor and its bankruptcy case.

Realities of Assumption of Lease
If the debtor assumes a lease,
CLAIMS
BENEFITS
HUMAN
the Bankruptcy Code requires the MANAGEMENT RESOURCES EDUCATION AND
debtor to cure all defaults or provide When a claim is CONSULTING CONSULTING
adequate assurance of their prompt made, we assist in the Develop policies and Cra a competitive

cure, including both pre-petition and process, from the first procedures, address employee benefits plan
recruiting strategies,
to recruit and retain
post-petition defaults. However, in ac- filing of the claim to its develop job descriptions. valuable employees.
resolution.
tuality, the debtors are only required
to provide adequate assurance of the
cure. The Bankruptcy Code does not
define the term “adequate assurance.” PUTTING ALL THE HEALTHCARE
Consequently, the bankruptcy courts BENEFIT PIECES TOGETHER
tend to analyze the proposed “ade-
quate assurance” to each case’s facts. OFFICE ONLINE
713-647-9700
www.corebenefits.net
It has been held by case law that each
case must rest on a pragmatic analysis
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