Author: Andrew M. Thaler Bankruptcy intersects with many areas of the law on a daily basis including real estate law. In some instances a bankruptcy filing might be the only way for a purchaser to avoid default under a contract to purchase real property. That being said, a bankruptcy should only be filed after careful analysis and consideration of numerous factors.
0 Comments
Author: Andrew M. Thaler A. Landlord and tenant bankruptcies; overview of rights of principal players
1. Tenant files bankruptcy a) Tenant’s rights i. Tenant benefits from an automatic stay that stops commencement or continuation of eviction, collection, or other proceedings.[2] ii. Tenant has the right not to be evicted or have other action taken against it or the property without the landlord first making a motion in the bankruptcy court to lift the automatic stay.[3] iii. Tenant has the choice to assume, assume and assign, or reject the lease.[4] iv. Time periods for assumption and rejection gives the tenant time to attempt to successfully reorganize.[5] v. Tenant’s prior defaults are not a basis for the landlord to terminate the lease (i.e., ipso facto clauses are not enforceable in bankruptcy).[6] b) Landlord’s rights i. Tenant is obligated to continue making rent payments under the lease until such time as the tenant rejects the lease.[7] a. “Stub rent” is the term used for the rent due during the month the tenant filed its bankruptcy petition. The bankruptcy court may order that the rent due for that month must be prorated, entitling the landlord to administrative rent only for the portion of rent representing the time period between petition date and the end of the month.[8] ii. Rent accruing post-petition and pre-decision to assume or reject the lease is given priority as an administrative expense.[9] iii. Tenant is obligated to comply with non-monetary lease provisions.[10] iv. If the tenant assumes and later breaches a commercial real estate lease, the landlord is entitled to damages equal to the sum of all monetary obligations due, aside from penalties, for the two year period “following the later of the rejection date or the date of actual turnover of the premises.”[11] a. The landlord’s claim for remaining sums due under the balance of the lease term are limited to the greater of rent for one year or 15% of three years of the remaining lease term.[12] v. If the lease expires on its own terms, the landlord cannot be compelled, absent a provision in the l lease, to renew or extend the lease.[13] Author: Andrew M. Thaler Upon the filing of a Bankruptcy Petition all property owned by the debtor automatically becomes
property of the bankruptcy estate by operation of law. Debtors are required to list in their Bankruptcy Schedules all property that they own or in which they have an interest. Individual debtors can legally exempt certain property and keep it from their creditors. However, exempt and non‐exempt property becomes “property of the estate”. If a debtor fails to disclose property in his/her Schedules there can be adverse consequences. For example, the debtor’s discharge of all debts could be denied. Beyond that, property which is not “administered” by the trustee theoretically remains property of the estate forever. The Bankruptcy Code does, however, provide that property that is disclosed but not administered is likewise abandoned by operation of law back to the debtor when the bankruptcy case is closed. Author: Andrew M. Thaler The answer to the question of whether you can discharge taxes in personal bankruptcy is – it depends. This is a very complicated area of bankruptcy law. Whether a tax will be discharged depends in part on the type of tax, when the tax was incurred and the conduct of the tax payer. While most taxes cannot be discharged in bankruptcy, there are some taxes that can.
First, let’s discuss taxes that are not dischargeable. If sale or payroll taxes are owed, they will not be discharged in a personal chapter 7 bankruptcy. Those taxes are collected by the business/taxpayer for the benefit of the state or federal government. Individuals collect such taxes as a “fiduciary”. A fiduciary is a person or business with the power and obligation to act for another under circumstances which require total trust, good faith and honesty. Author: Andrew M. Thaler Upon the filing of an individual chapter 7 bankruptcy petition the court schedules a meeting of
creditors. The meeting, by statute, must be held between 21 and 40 days from the filing date. The debtor will receive a notice from the court shortly after the filing notifying him to appear for the examination. The meeting of creditors affords the trustee, creditors and parties in interest with the opportunity to question the debtor with regard to his or her property and debts. |
AuthorsThis blog is maintained by: Spiros Avramidis
Categories
All
Archives
November 2021
|