AGG Real Estate Litigation team co-chair Knox Withers authored an article for Commercial Property Executive sharing pre-bankruptcy best practices for office and industrial landlords. He advised that a disciplined prefiling can protect cash flow, speed re-tenanting, and preserve asset value.
Knox explained what happens on the first day of bankruptcy. “The moment a petition is filed, most collection and eviction activity must stop unless authorized by the bankruptcy court. Lease provisions that treat bankruptcy itself, Ipso facto, are generally unenforceable,” he said. If landlords want to keep the space, a debtor must pay post-petition rent on time and fix any problems with the lease.
He also discussed how Chapter 11 tenants use the lease. “A tenant generally has 120 days, often extendable to 210 days, to decide whether to assume or assume and assign the lease. After rejection, the landlord holds a capped damages claim. Tenants are most likely to assume or assign leases that are at or below market,” he said.
“By choosing remedies strategically, documenting defaults carefully, protecting administrative priority, and using guaranties effectively, landlords can shorten timelines, reduce carrying costs, and maintain control over outcomes,” said Knox.
To view the full article, you may click here.
- C. Knox Withers
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