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Bankruptcy Landlord Tenant Law Litigation

Commercial Lease Assumption Under Chapter 11 Bankruptcy

Given the potentially harsh consequence of failing to timely assume a vital lease, a Chapter 11 debtor must be vigilant to avoid a forfeiture. It is important to know, however, that all might not be lost even if the debtor misses this deadline.

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The Bankruptcy Code provides a Chapter 11 debtor a powerful commercial lease tool to aid its restructuring efforts. A debtor may assume valuable real estate leases, and reject onerous ones. As explained below, a debtor’s time to assume commercial leases under which it is a lessee is limited to either 210 or 300 days from the date of the bankruptcy filing, unless the landlord consents to further extensions. The Bankruptcy Code further provides that a debtor’s failure to assume a commercial lease before expiration of this time limit results in the lease being “deemed rejected,” requiring the debtor to surrender immediately possession of the leases premises.

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