A recent Financial Times article about soaring U.S. healthcare bankruptcies might seem surprising. It reported that were almost five times as many 2023 Chapter 11 filings among large healthcare companies as in 2022.
But a quick review of the last few years shows that the problems have been growing in plain sight. This is potentially bad news for landlords as bankruptcy filings can leave creditors hanging out to dry, as WeWork's bankruptcy process has reminded.
"Bankruptcy affords the ability to cancel leases and cap the rejection damages the landlords can get," John Sparacino, a principal with McKool Smith's Bankruptcy Litigation practice area, previously told GlobeSt.com. "If there are many years left on a lease, the debtor can reject the lease "and damages are basically capped at one-year's rent."
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