The Costly Road
The voluntary winding-up (<i>liquidation volontaire</i>) of a corporation is one of the many, though expensive, options available to shareholders wishing to withdraw from a corporation facing financial difficulties. Other options include the sale of their stake or of the corporation itself, possibly following a restructuring. The corporation may be sold as a whole or, where these exist, through the divestment of one or more branches of activity. The transaction may then be effected through various share deals for the different subsidiaries, or through the sale of assets, subsequent to which the corporation will still have to be wound up. A lease of business (<i>location g'rance</i>) followed by the sale of the business may also be an option.
Bankruptcy Lease Sales: Four Basic Rules to Play By
Bankruptcy presents a unique forum for a cash-strapped debtor to sell otherwise unassignable and unprofitable leases to third parties, for immediate cash, and free of liens, certain contract restrictions, certain transaction costs, and future liability. While the bankruptcy arena offers unique opportunities, it poses special risks. The primary players in a bankruptcy lease sale scenario are the debtor, the prospective buyers, and the landlord. A debtor's goal is getting as much value as fast as possible for its creditors. A prospective buyer wants to pay as little as possible, with sufficient due diligence, and have an unassailable sale with whatever lease modifications are necessary for it to remodel and reopen. A landlord's objective is timely lease compliance and a financially and operationally sound buyer. Each party can benefit from following these four basic rules of bankruptcy lease sales.
Protecting Against Common Pitfalls Encountered By Landlords in Bankruptcy Cases
Since its enactment in 1978, the Bankruptcy Code has provided a means for debtors either to reorganize their financial affairs or to liquidate their assets. Within this framework, bankrupt tenants have often utilized the provisions of the Bankruptcy Code to the detriment of landlords, and landlords have increasingly become either involuntary creditors or financiers during a bankruptcy case or have suffered some type of unexpected loss.
Bond Airport Financed Leases
The United Air Lines bankruptcy case has spawned several reported decisions, at the bankruptcy court level, the district court level and the circuit court level.
Tell Me My Options: Drafting an Option to Purchase the Property
When considering a new lease for a single use property, generally the tenant of the property will want to consider its "exit" strategies at the time of the initial negotiation of the lease. Potential "exit" strategies may include: assignment of the lease, early termination rights and options to purchase the property. The last on the list of these "exit" strategies, options to purchase the property, often creates substantial business issues for the landlord and tenant, as well as drafting issues for their legal representatives. As a result, certain conceptual issues, set forth and discussed below, should be addressed when drafting an option to purchase the property.
In the Spotlight: Pay Attention to the Work Letter
The work letter that is attached to a lease, particularly an office lease, is a very important part of the lease document. Because it is an exhibit, and because many leasing professionals are not especially well versed in construction issues, the work letter is frequently given little attention during a lease negotiation.
