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Retail Lease Workout In Bankruptcy Trends Show 'We're All In This Together'

By David Samole
July 01, 2021

We are still dealing with the pandemic and its impact. The way we live our lives and interact with one another has changed, and the way we transact business and approach commerce has evolved.

The pandemic brought with it social distancing, enhanced telecommuting and other health protection policies, and it was followed by business interruption lawsuits, mothballed bankruptcy cases, fights over ongoing rents, certain government-sponsored loans, and tremendous uncertainty for retailers, restaurants and other consumer-based companies. The retail sector suffered economically, and retailers/restaurants with locations across the country filed for Chapter 11 bankruptcy. One of the primary consequences was for financially distressed companies to utilize the Bankruptcy Code's provisions for rejection of above-market leases or underutilized real estate to reduce their physical footprint and related obligations.

Last year, in the midst of the pandemic, I wrote about "The Ten Commandments of Landlord and Commercial Tenants in Bankruptcy," which discussed some technical aspects of landlord and commercial tenants in Chapter 11 bankruptcy. There have been plenty of cases in the interim that shape the landlord-commercial tenant dynamic both in Chapter 11 bankruptcies and in workouts.

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