Cautionary Tales For Landlords Of Bankrupt Tenants

Law360, New York (September 8, 2017, 4:32 PM EDT) -- It has become a truism in recent years that consumers have changed their shopping habits, shifting away from brick-and-mortar stores to online shopping. As a result, retailers have sought to close physical stores and extract themselves from real-property leases. This new dynamic can present commercial landlords with a number of risks, including the possibility of breached leases and tenant bankruptcies.

In planning for such risks, commercial landlords should be aware of a provision of the Bankruptcy Code — Section 502(b)(6) — that may limit their ability to recover certain damages in the event their tenants file bankruptcy. In some cases, landlords...

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