&ALIVE IN THE BL ACK STAYING
MINIMIZE LOSSES AFTER A TENANT ENTERS CHAPTER 11 BANKRUPTCY
BY RANDALL L. AIRST, ESQ., LLM
Over the past few years, thousands of
companies have gone bankrupt, costing creditors billions
of dollars. In many instances, rent represents the single
largest recurring expense. Consequently, when business
goes south, and companies begin to consider bankruptcy
protection, rent and related costs are singled out for particularly careful scrutiny.
As a real estate manager, you can help mitigate dam-
ages during the post-filing stage of bankruptcy by becoming
familiar with the process. Section 365 of the bankruptcy
code provides the tenant with an opportunity to “assume,”
“reject” or “assign” its leasehold interests. Tenants will exam-
ine each lease to determine which of these three options is
best—and you should do no less. Determine whether con-
tinued occupancy, assignment or vacant possession contrib-
utes most to the bottom line of the properties you manage.
