Lease Analysis Gives Win for Commercial Landlord In Bankruptcy Case

Bankruptcy Code “[§]365(d)(4) does not apply to the [purported lease] because it is not a ‘true lease,’” held the Second Circuit in In re Sears Holdings Corporation, 2024 WL 5113165, *3 (2d Cir. Dec. 16, 2024). In the seventh reported decision covering the purported lease assignment in this case — one from the Supreme Court, three from the Second Circuit, and three from the district court — the Second Circuit apparently ended a multi-year litigation by affirming the district court’s decision that the landlord’s appeal was “moot for lack of a remedy because, although [that] court [had properly] vacated the assignment and assumption of the lease …, the lease would not revert to [the landlord under Code] §365(d)(4), and that [the landlord] had no alternative remedy.” Id. at *1, citing In re Sears Holding Corp., 661 B.R. 298 (S.D.N.Y. 2024) (Sears VI). According to the Second Circuit, the debtor “neither waived nor forfeited the argument that [§]365(d)(4) did not apply here and … [the district court had properly] return[ed] the lease to the [debtor’s estate] outside of the assumption procedures set forth in [Code §]365.” Id. at **1, 6.