Commercial tenants will be taking the brunt of our current economic uncertainty. Long term leases that were signed in good times can be the stone that sinks a business in bad times. Landlords are reluctant to renegotiate leases and finding a new tenant to replace the current tenant is a long shot at best. Chapter 11 bankruptcy gives a tenant the power to toss that stone out of the business and stay afloat.
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Bankruptcy Beats Bad Leases
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In a chapter 11 bankruptcy, a business may:
1. Reject leases on unprofitable locations with a cap on damages;
2. Assume leases on profitable locations with a one-year payment plan for past-due rent assume; and
3. Assign leases to a third party
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