Complexity of Bankruptcy for Shopping Center Tenants
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In light of conflicting rights, the issue becomes how a court can balance the interests of a landlord and existing tenants against the interests of the debtor-tenant’s estate and creditors, says Rosen.
When a retailer files for bankruptcy, there are unique and sometimes conflicting legal rules and precedents–particularly if the retailer is housed in a shopping center. That is according to Kenneth A. Rosen, chairperson of the Bankruptcy, Financial Reorganization & Creditors’ Rights Departmentat Lowenstein Sandler LLP and Nicholas Vislocky, an associate in the department. In the exclusive commentary below, the two dive further into the subject and its complexities.
The views expressed below are the authors’ own.
A retail tenant in Chapter 11 (or “debtor-tenant”) has certain obligations under the Bankruptcy Code, specifically section 365, with respect to unexpired real property leases. The debtor-tenant also has a number of rights unique to the bankruptcy process, subject to certain conditions, which allow the retailer to assume or affirm a lease. And the debtor-tenant can also sell or assign the lease to a third party under the existing lease…
