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Landlord's Claim Puts Letter of Credit Proceeds at Risk
A recent bankruptcy decision makes clear that it is risky for a landlord to file a proof of claim in a bankruptcy proceeding when the landlord has substantial security in the form of both a security deposit and letter of credit. If a landlord has drawn down the letter of credit proceeds and withdrawn the security deposit in full after the tenant's default, filing a proof of claim in the tenant's subsequent bankruptcy proceeding may invite a bankruptcy court's consideration of whether those funds are or should be assets of the bankruptcy estate.
In 40 CPS Associates, LLC v. Villano Family Limited Partnership, 2015 U.S. Dist. LEXIS 158033 (E.D.N.Y. Nov. 23, 2015), a New York district court dismissed CPS Associates' appeal of an order of the bankruptcy court authorizing a family limited partnership to object to claims it asserted against the estate of the debtor, including its claim for payment of an administrative expense for the debtor's post-petition rent or postpetition use and occupancy of real estate. In this case, CPS Associates, the landlord, drew down a letter of credit issued to ensure payment of rent and also filed a proof of claim in the tenant's bankruptcy.
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The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Beach Boys Songs Written Decades Ago Triggered Current Quarrel With Lawyers
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Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
When Is a Repair Structural or Nonstructural Under a Commercial Lease?
A common question that commercial landlords and tenants face is which of them is responsible for a repair to the subject premises. These disputes often center on whether the repair is "structural" or "nonstructural."