In A Landlord Bankruptcy Sale, What Happens To The Lease?

By Michael Cook (December 14, 2018, 3:08 PM EST) -- The U.S. Court of Appeals for the Third Circuit held on Nov. 30, 2018, that "Section 365(h) of the Bankruptcy Code and the doctrine of equitable recoupment entitled [a commercial tenant] to continue paying [reduced] rent … even after its landlord filed for bankruptcy and rejected the [l]ease," in In re Revel AC Inc.[1] Affirming the lower courts, the Third Circuit sensibly explained that "[n]othing in the agreements or court orders governing [a third party's] purchase of the [debtor's] casino in bankruptcy changes this result."[2]


Few cases address a landlord debtor's bankruptcy and its effect upon tenants. This case deals...

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