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When a tenant files for bankruptcy, the commercial landlord is faced with the often worrisome prospect that its unexpired lease may be rejected in the bankruptcy proceedings. A tenant’s right to reject a lease, and thereby disavow its future lease obligations, does not exist outside of bankruptcy and often plays a large role in its decision to file for bankruptcy. During the period that the debtor tenant is determining whether or not to assume a non-residential lease, the Bankruptcy Code requires it to timely perform the obligations under the lease which arise after the commencement of the bankruptcy case. See, 11 U.S.C. §365(d)(3)(A). However, that is not the case for lease obligations related to time periods occurring after a lease is rejected. The Bankruptcy Code creates a fiction that rejection of a lease, although effectuated post-petition, constitutes a breach which occurred immediately prior to the filing of the bankruptcy petition. See, 11 U.S.C. §365(g)(1).
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Sui Generis: Negotiate Like You Mean It
By Lydia Pilch
As further follow-up regarding tracking of the lifecycle of a commercial lease, Part Two of this series addresses various negotiation events, strategies, desired outcomes and potentially low key disasters.
New York’s Guaranty Law Continues to Divide Opinion
By Matthew J. Schenker and Joshua Kopelowitz
This article discusses the recent developments surrounding the constitutionality of New York's Guaranty Law. In particular, we address the Southern District’s view that the statute is unconstitutional and the splintered view of the statute’s constitutionality expressed by New York State courts.
Don’t Get Caught Holding a Conditional Loan Approval at Closing
By Matthew Kramer
With rising interest rates and more stringent lending standards for both residential and commercial properties, security deposit disputes caused by buyers’ inability to satisfy pre-closing purchase-financing conditions are also increasing.
New York’s Seldom Used Expedited Money Judgment Mechanism: CPLR 3213
By Massimo F. D’Angelo and Gregory Wong
In New York state and local court cases, there is a seldom-used procedural mechanism for obtaining an expedited money judgment against a guarantor. This article provides an overview of CPLR 3213 motions, an update on the resolution of the split that previously existed between the New York State Supreme Court, Appellate Division, First and Second Departments, and practical guidance for transactional counsel drafting commercial leases and guaranties.
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