Page 12 - NBIZ October 2020

assurance of a cure. But while the inclination is to fight back. Without a reasonable time. Acceptance of the
Bankruptcy Code requires this, the re- the lease, the debtor’s plan will not debtor’s demands may be the lesser of
ality is that this protection is becoming be effective. two evils. In recent bankruptcy cases,
less common and debtors are assuming It has always been an option to re- debtors do not directly negotiate with
or proposing to assume leases know- negotiate a lease with a landlord before landlords but hire brokers with little
ing that it will not and cannot cure all assumption. While no side was happy, negotiating authority. However, if
previous monetary defaults. the landlord got something—he or she both parties allow some concessions,
Recently, debtors are assuming a could be reasonably comfortable that landlords can prevail. N
large number of leases on their terms the debtor will pay rent in the future.
without curing monetary defaults, However, with changes in consumer Endnotes
which is potentially a grave danger behavior and brick and mortar stores 1. Case No. 15-12406 (KG); In re Restaurants
not only to landlords but also to becoming less important to shoppers, Acquisition I, LLC, (“Black Eyed Pea” or
the purchasers of these leases. For retail debtors, in particular, are becom- “Debtor”); In the United States Bankruptcy
example, occupancy requirements ing more aggressive and demanding Court for Delaware.
and loan-to-value ratios could invoke more concessions from landlords. 2. See Case No. 20-33163; In re CEC Entertainment,
technical defaults under a landlord’s Landlords are now more often faced Inc., et al. (Jointly Administered), In the United
note, risking ownership change. Mon- with a decision to either accept a States Bankruptcy Court for the Southern
etary defaults are also possible due to debtor’s assumption without a full District of Texas, Houston Division. (MI);
the debtor’s financial inability to cure cure of all past defaults or lose a tenant Case No. 20-32564, In re Stages Stores, Inc.
its rent defaults. So, a landlord’s first with no guarantee to relet the space in (Jointly Administered), In the United States
Bankruptcy Court for the Southern District of
Texas, Houston Division. (DRJ); Case No. 20-
20182, In re J.C. Penney Company, Inc. (Jointly
Administered), In the United States Bankruptcy
Court for the Southern District of Texas,
Houston Division. (DRJ).
3. Richmond Leasing Co. v. Capital Bank, N.A., 762
F.2d 1303, 1310 (5th Cir. 1985); In re Patriot Place,
Ltd., 486 B.R. 773, 801 (Bankr. W.D. Tex. 2013).

Angeline Vachris Kell is an attorney at
HooverSlovacek LLP. She received her
Juris Doctor from South Texas College
of Law and a Bachelor of Arts with a
Spanish major from the University of
Texas. Mrs. Kell is the past president
of the Hon. Arthur L. Moller/David B.
Foltz, Jr. American Inn of Court.

Vianey Garza is an associate attorney
at HooverSlovacek LLP. She received
her Juris Doctor from South Texas
College of Law and a Bachelor of
Arts and a Bachelor of Science from
the University of Texas–Austin. Mrs.
In the past, landlords would usually be entitled to Garza is the treasurer of the Hon.
post-petition rents as an administrative claim, which Arthur L. Moller/David B. Foltz, Jr.
American Inn of Court.
would mean the landlord would at least be paid in full
for the rent owed between the date the bankruptcy Haley Kurisky is a third-year law
case was filed and the date the lease was rejected. student at the University of Houston
Law Center. She graduated from
However, it is becoming more common for debtors Rice University with a Bachelor of
to ask that leases be rejected retroactively to the Arts in Sociology. At UHLC, she is
involved with the alternative dispute
bankruptcy filing date. resolution (ADR) team and the
Houston Journal of International Law.

12 NBIZ ■ October 2020