Article
Adjusting Lease Obligations in Pandemic Bankruptcies
Bankruptcy Law Letter
(2020)
Abstract
COVID-19 has wreaked a special sort of havoc on retail bankruptcy cases that were filed in the first quarter of 2020. These cases began with assumptions about the company’s ability to sell assets, dispose of leases, and pursue other carefully crafted strategies to maximize firm value. The nation’s economic shutdown thoroughly derailed such plans. Many debtors with newly filed cases begged the bankruptcy courts for relief to weather the shutdown. They sought to streamline litigation procedures, delay payment of certain obligations, or “mothball” the entire bankruptcy case until the virus abates.
These request for relief, however reasonable, are nearly impossible to reconcile with Bankruptcy Code provisions that favor commercial lessors of real property. And so, courts inclined to grant debtors relief in these extraordinary times were pressed to thread a difficult needle: providing debtors time and space to weather the government mandated stay-at-home orders, while respecting Bankruptcy Code provisions facially at odds with such relief. The analytical pathway to achieving these ends is complex and convoluted, illustrating the limitations of Code provisions that bind bankruptcy cases to rigid and inflexible deadlines.
Keywords
- retail bankruptcy,
- COVID-19,
- Bankruptcy Code
Disciplines
Publication Date
October, 2020
Publisher Statement
Reprinted from Bankruptcy Law Letter, Volume 40, No. 10, October, 2020, with permission. Copyright © 2020, Thomson Reuters. For more information about this publication, please visit https://legal.thomsonreuters.com/en/products/law-books.
Citation Information
Kara J. Bruce. "Adjusting Lease Obligations in Pandemic Bankruptcies" Bankruptcy Law Letter Vol. 40 Iss. 10 (2020) p. 1 Available at: http://works.bepress.com/kara-bruce/17/