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The Ninth Circuit affirmed. 'While rejection of a lease prevents the debtor from obtaining future benefits of the lease, (such as ongoing possession of the leased premises), it does not rescind the lease or defeat any pending claims or defenses that the debtor had in regard to that lease.' Consequently, the rejection of the lease by the trustee does not bar a breach of contract action to recover the balance of the security deposit.

Record Number of Bankruptcy Filings in 2005; Business Filings up 14%

For the first time ever, U.S. bankruptcy filings surpassed 2 million ' 2,078,415 filings were reported in calendar year 2005, according to data from the Administrative Office of the U.S. Courts. This 12-month total for the period ending Dec. 31, 2005, represents a record 30% increase compared with the 1,597,462 total filings for the same period in 2004. While the vast majority of these filings were consumer cases (98% of the total), business filings also increased by 14% to 39,201 for the 12-month period ending Dec. 31, 2005, from the total of 34,317 from same period in 2004. This is the highest total of business bankruptcies in a calendar year since 2001's total of 40,099.

Business filings for the 3-month period ending Dec. 31, 2005, totaled 12,798, a 64.54 % increase from the 7778 bankruptcy business cases filed in the same period in 2004. Non-business filings for the same 3-month period totaled 654,633, an 80% increase from the 363,890 total in the same quarter in 2004. This record number of fourth-quarter filings coincided with the Oct. 17 implementation date of BAPCPA as October filings alone accounted for 95% of the total filings for the 3-month period and 30% of the 12-month period ending Dec. 31, 2005. In addition, the 10,909 business filings in the month of October accounted for 28% of the business-filings for the 12-month period ending Dec. 31, 2005 and 85% of the 12,798 business filings for the fourth quarter 2005. Not surprisingly, the total filings of 36,934 for the months of November and December 2005 represented only 1.78% of the total 12-month period ending Dec. 31, and 6% for the fourth quarter 2005.

Trustee Entitled to Recover Security Deposit of Rejected Lease

The Ninth Circuit has ruled that even after rejecting a commercial lease, a bankruptcy trustee was entitled to pursue the recovery of a debtor's full security deposit secured by cash and a letter of credit. First Avenue West Building LLC v. James (In re OneCast Media Inc.), No. 04-35324, (Feb. 23).

The debtor held a lease for office that was secured by a substantial security deposit comprised of cash and a letter of credit. Upon filing bankruptcy, trustee rejected the lease. After the landlord drew down the letter of credit and retained the proceeds as a security deposit, the trustee filed suit seeking to recover the remaining security deposit. The bankruptcy court ruled that to the extent the claim sought recovery of the portion of the security deposit secured by the letter of credit, the letter of credit was not property of the bankruptcy estate and therefore not within the bankruptcy court's jurisdiction. The district court reversed and remanded the matter to the bankruptcy court to permit the trustee to pursue recovery of damages up to the full amount of the security deposit, including the letter of credit.

The Ninth Circuit affirmed. 'While rejection of a lease prevents the debtor from obtaining future benefits of the lease, (such as ongoing possession of the leased premises), it does not rescind the lease or defeat any pending claims or defenses that the debtor had in regard to that lease.' Consequently, the rejection of the lease by the trustee does not bar a breach of contract action to recover the balance of the security deposit.

Record Number of Bankruptcy Filings in 2005; Business Filings up 14%

For the first time ever, U.S. bankruptcy filings surpassed 2 million ' 2,078,415 filings were reported in calendar year 2005, according to data from the Administrative Office of the U.S. Courts. This 12-month total for the period ending Dec. 31, 2005, represents a record 30% increase compared with the 1,597,462 total filings for the same period in 2004. While the vast majority of these filings were consumer cases (98% of the total), business filings also increased by 14% to 39,201 for the 12-month period ending Dec. 31, 2005, from the total of 34,317 from same period in 2004. This is the highest total of business bankruptcies in a calendar year since 2001's total of 40,099.

Business filings for the 3-month period ending Dec. 31, 2005, totaled 12,798, a 64.54 % increase from the 7778 bankruptcy business cases filed in the same period in 2004. Non-business filings for the same 3-month period totaled 654,633, an 80% increase from the 363,890 total in the same quarter in 2004. This record number of fourth-quarter filings coincided with the Oct. 17 implementation date of BAPCPA as October filings alone accounted for 95% of the total filings for the 3-month period and 30% of the 12-month period ending Dec. 31, 2005. In addition, the 10,909 business filings in the month of October accounted for 28% of the business-filings for the 12-month period ending Dec. 31, 2005 and 85% of the 12,798 business filings for the fourth quarter 2005. Not surprisingly, the total filings of 36,934 for the months of November and December 2005 represented only 1.78% of the total 12-month period ending Dec. 31, and 6% for the fourth quarter 2005.