Alternatively, the debtor can elect to assume the lease. Assumption requires the debtor to cure all prepetition defaults, including payment of all past due rents, on assumption. The debtor has 120 days, which can in certain circumstances be extended another 90 days, to assume or reject the lease. During the time debtor decides to assume or reject the lease, all post-petition obligations, including payment of rent must be paid. The court may “for cause” extend the time for performance of any post-petition rent, for up to an additional 60 days.
Author: Andrew M. Thaler Chapter 11 reorganization allows the debtor to reject undesirable leases. If the debtor opts to reject the lease, the landlord is left with a breach of contract claim. In most instances rejection claims against the bankruptcy estate will be for less than the remaining rents under the lease as the claim is capped pursuant to the bankruptcy code.
Alternatively, the debtor can elect to assume the lease. Assumption requires the debtor to cure all prepetition defaults, including payment of all past due rents, on assumption. The debtor has 120 days, which can in certain circumstances be extended another 90 days, to assume or reject the lease. During the time debtor decides to assume or reject the lease, all post-petition obligations, including payment of rent must be paid. The court may “for cause” extend the time for performance of any post-petition rent, for up to an additional 60 days.
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Author: Andrew M. Thaler The filing of bankruptcy operates as an automatic stay of the enforcement of a judgment against the debtor or property of the estate, the commencement or continuation of litigation against the debtor, the taking of possession or control of property of the estate, and more. Creditors are often placed in a position of not knowing what to do when they learn that a debtor has filed bankruptcy. Some common scenarios are where, prior to bankruptcy, (i) a creditor seized the debtor’s vehicle, (ii) the Sheriff garnished and is holding debtor’s wages, or (iii) creditor’s counsel engaged in litigation have pending outstanding interrogatories, subpoenas, motions or other court hearings.
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AuthorsThis blog is maintained by: Spiros Avramidis
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