A typical receivership order does not limit the ability of a managing member to seek limited liability company bankruptcy relief for distressed real estate or other enterprises.
An enterprise, even if in receivership,...more
This is the second in our series of alerts on taxable cancellation of debt income.
When debt is cancelled or discharged, the debt generally becomes taxable income, called cancellation of debt income....more
The complexities of cancellation of debt income (CODI), including bankruptcy and insolvency implications, are important to understand.
When debt is cancelled or discharged, the borrowed funds become taxable income, or...more
A recent bankruptcy court decision determined that a debtor cannot reject an unexercised option for the purchase of its real estate, raising a potentially significant bar to any debtor extricating itself from an under-market...more
An oversecured creditor can recover default interest where the sole default trigger was the borrower’s bankruptcy filing after considering all relevant equitable considerations.
While Bankruptcy Code section 506(b)...more
New York bankruptcy court breaks with precedent and endorses time approach for calculating lease termination damages over rent amount approach, resulting in smaller claims for landlords.
Time approach limits, and often...more
If you really want to be released from your lease obligations and those of your assignee, you need to get a landlord release at the time of assignment.
An assignor tenant’s lease obligations survive an otherwise permitted...more
1/27/2022
/ Bankruptcy Court ,
Chapter 11 ,
Commercial Bankruptcy ,
Commercial Leases ,
Coronavirus/COVID-19 ,
Landlords ,
Leases ,
Material Change Doctrine ,
Pre-Bankruptcy Claims ,
Proof of Claims ,
Releases
One year into the pandemic, courts have almost uniformly found that COVID-19 does not permit commercial tenants to avoid their rent payment obligations. In this case, the court continued that trend, ruling that the pandemic...more
Congress introduces legislation to extend the $7.5 million debt ceiling for Subchapter V eligibility for an additional year to March 27, 2022.
Subchapter V was designed to be a cost-effective distress tool for small...more
Hospitality debtors with substantial equity but prolonged depressed revenues due to COVID-19 may find negative amortization, a tool used sparingly pre-pandemic, helpful in the restructuring of mortgage debt under a chapter 11...more
2/25/2021
/ Amortization ,
Bankruptcy Court ,
Chapter 11 ,
Commercial Real Estate Market ,
Coronavirus/COVID-19 ,
Debt Restructuring ,
Debtors ,
Hospitality Industry ,
Mortgages ,
Recovery Plans ,
Remote Working
While the recent Bankruptcy Code amendments allow small business debtors to extend their deferral of lease obligations beyond the first 60 days of the bankruptcy case, the amendments raise and leave unanswered important...more
1/27/2021
/ Bankruptcy Code ,
Bifurcation ,
CARES Act ,
Chapter 11 ,
Commercial Leases ,
Consolidated Appropriations Act (CAA) ,
Coronavirus/COVID-19 ,
Debtors ,
New Amendments ,
Small Business ,
Small Business Reorganization Act of 2019 (SBRA)
A recent Chuck E. Cheese decision rejects the debtor’s/tenant’s request to avoid paying rent based upon state law equity arguments.
CEC’s leases expressly do not permit rent relief even if force majeure is triggered....more
A recent Chuck E. Cheese decision denies the debtor’s/tenant’s request to defer paying rent after the 60-day “rent holiday.”
The Bankruptcy Court applied the “plain language” rule to hold that section 365(d)(3)’s rent...more
“Can an unsecured creditor be better off when the debtor defaults rather than paying off the debt? Yes: Law can be stranger than fiction in the Preference Zone.”—Ninth Circuit
Untimely payment by tenants and other obligors...more
8/20/2020
/ Appeals ,
Bankruptcy Appellate Panel (BAP) ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 11 ,
Chapter 7 ,
Commercial Tenants ,
Debtors ,
Default ,
Landlords ,
Late Payments ,
Letter of Credit ,
Preferential Transfers ,
Reversal ,
Security Deposits ,
Unsecured Debt
Illinois Governor’s Executive Order prohibiting sale of food or beverages for on-premises consumption held to partially excuse restaurant tenant’s rent payment obligations.
Bankruptcy Court finds that Executive Order...more
In a recent Delaware ruling, Judge Mary F. Walrath declines to follow the Fifth Circuit and holds that “a minority shareholder has [no] more right to block a bankruptcy… than a creditor does.”
Real estate and other lenders...more
Lenders should plan for real estate owner bankruptcies despite having a non-recourse carveout guaranty triggered by the owner’s bankruptcy filing.
Real estate bankruptcies may occur despite personal guaranties because...more
Multifamily condominium regimes with mounting liabilities and unpaid dues during COVID-19 may find answers in bankruptcy to the obstacles posed by individually titled units.
We created and implemented a strategy that allowed...more
Lease terminations may result in fraudulent transfer claims.
Lease terminations should document that the tenant is receiving reasonably equivalent value in exchange for rent forgiveness, relinquishing the premises and...more
Three Flint Hill may provide valuable lessons on the use of bankruptcy to reduce real estate debt to match present property values.
Chapter 11 strategies may exist for valuable real estate assets that are not producing...more
4/8/2020
/ Banks ,
Capital Assets ,
Capital Gains ,
Chapter 11 ,
Fair Market Value ,
Investment Funds ,
Lenders ,
Real Estate Development ,
Real Estate Investments ,
Refinancing ,
Rental Income
Gov. Whitmer strengthens her “stay home, stay safe” order and prohibits discharge, discipline, and retaliation against workers who stay home.
Gov. Whitmer defines quarantine periods and prohibits discharge, discipline, and...more
High Court review threatens to unravel Puerto Rico’s Title III bankruptcy cases.
The U.S. Supreme Court has agreed to review the First Circuit’s ruling invalidating the appointment of the members of the Puerto Rico...more
Reorganization plans providing for non-debtor releases (i.e., releasing non-debtors from claims by creditors of the debtor) have been regularly challenged in recent years, frequently by the United States Trustee and other...more