With this issue of its E-Newsletter, RLT introduces a new feature, a column of practical interest to both bankruptcy attorneys, other attorneys, and business people. We hope you find these pointers beneficial during the course of your day-to-day practice or business.
Commercial Tenant of Debtor Landlord Entitled to Remain in Possession Notwithstanding Rejection
The typical bankruptcy scenario involves a tenant filing for bankruptcy and the landlord facing the issue of how to deal with rejection of a real property lease. Occasionally, however, it is the landlord that files for bankruptcy. In that circumstance, even if the landlord rejects the lease pursuant to its business judgment, the Bankruptcy Code permits the tenant to remain in possession, although the landlord may not have to perform all of the services required under the lease. See In re Haskell L.P., 321 B.R. 1 (Bankr. D. Mass. 2005); contra Precision Industries, Inc. v. Qualitech Steel SBQ, LLC, 327 F.3d 537 (7th Cir. 2003). Although issues concerning the continuation of those tenancies and damages that tenants may suffer have not been widely litigated, they do present the opportunity to negotiate creative solutions as to damages and other remedies.