When a retailer files for bankruptcy, there are unique andsometimes conflicting legal rules and precedents--particularly ifthe retailer is housed in a shopping center. That is according toKenneth A. Rosen, chairperson of theBankruptcy, Financial Reorganization &Creditors' RightsDepartment at Lowenstein Sandler LLPand Nicholas Vislocky, an associate in thedepartment. In the exclusive commentary below, the two dive furtherinto the subject and its complexities.
The views expressed below are the authors' own.
A retail tenant in Chapter 11 (or "debtor-tenant") has certainobligations under the Bankruptcy Code, specifically section 365,with respect to unexpired real property leases. The debtor-tenantalso has a number of rights unique to the bankruptcy process,subject to certain conditions, which allow the retailer to assumeor affirm a lease. And the debtor-tenant can also sell or assignthe lease to a third party under the existing lease.
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