When a debtor that is a landlord rejects a real property lease in bankruptcy, the tenant has a choice. Either the tenant can treat the lease as terminated or retain its rights under the lease.
Bankruptcy Court Decides Issue of First Impression Concerning Code Section 365(h)
When a debtor that is a landlord rejects a real property lease in bankruptcy, the tenant has a choice. Either the tenant can treat the lease as terminated or retain its rights under the lease. These rights include the use, possession, quiet enjoyment, subletting and hypothecation of the property. In a recent case, the parties and the court grappled with this question: when does the tenant need to make that decision? When the lease is rejected, or by some other date?

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