By Kate Thomas (August 28, 2017, 11:59 AM EDT) -- Do a lessee's possessory interests in real property survive a "free and clear" sale of the property under Section 363(f) of the Bankruptcy Code? In a recent decision, the Ninth Circuit Court of Appeals said "no," holding that Section 365(h) did not protect the interest of the lessee in the context of a Section 363 sale when there had been no prior formal rejection of the lease under Section 365. In so holding, the Ninth Circuit joined the Seventh Circuit Court of Appeals in rejecting the majority view that a sale of real property under 363(f) does not extinguish leasehold interests in that property. The Ninth Circuit's decision undermines the notion that lessees enjoy special protections under the Bankruptcy Code and underscores the need for lessees to be proactive in protecting their interests when their lessors file bankruptcy....