Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Pros and Cons of Master Leases
Section 365 of the Bankruptcy Code grants debtors the ability to assume or reject any executory contract or unexpired lease. Debtors must assume or reject a lease in its entirety and are not free under Section 365 to assume only favorable provisions of a lease. See, In re Village Rathskeller, Inc., 147 B.R. 665, 671 (Bankr. S.D.N.Y. 1992). Courts, however, have consistently held that they will not find a multi-property master lease to be a unitary lease merely because such properties are demised in a single document. See, e.g., In re Buffets Holdings, 387 B.R. 115, 120 (Bankr. D. Del. 2008).
In sale-leaseback transactions involving a portfolio of properties, landlords often require that properties be grouped in master leases rather than several individual leases — despite the resulting loss of flexibility for both landlord and tenant — in order to protect against the risk that the tenant can "cherry pick" by rejecting leases for less desirable properties in a bankruptcy.
Debtors in bankruptcy cases frequently challenge the master lease structure and the premise that a master lease agreement is a single, unitary contract that must be assumed or rejected in its entirety. Whether a master lease agreement is unitary or severable is a question of state law. That said, the Bankruptcy Code provides some relevant guardrails, as courts must decline to treat a master lease as a unitary contract if there is no reason for the leases to be integrated beyond the landlord's desire to maximize their recovery in bankruptcy. See, Buffets Holdings, 387 B.R., at 124.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
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.
'Huguenot LLC v. Megalith Capital Group Fund I, L.P.': A Tutorial On Contract Liability for Real Estate Purchasers
In June 2024, the First Department decided Huguenot LLC v. Megalith Capital Group Fund I, L.P., which resolved a question of liability for a group of condominium apartment buyers and in so doing, touched on a wide range of issues about how contracts can obligate purchasers of real property.
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.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.