Landlord Protections Give Bankruptcy-Preventing Deals a Boost

Bloomberg Law (March 26, 2021) Commercial landlords have a greater incentive to grant rent deferrals to struggling brick-and-mortar businesses following a temporary rule change that prevents bankrupt tenants from clawing back rent payments made under those deals. Bankruptcy law allows debtors to sue to get back certain “preferential” payments they made in the 90-day period before the bankruptcy was filed. But the latest rule change, part of the $2.3 billion stimulus package Congress passed in late December, blocks bankrupt tenants from such lawsuits to recoup rents paid in a deferred rent agreement they struck with their landlords within the 90-day period. The change expires in December 2022. But without it, retailers, restaurants, movie theaters, and other commercial tenants that received a break from landlords during the pandemic could try to get their rent back after filing for bankruptcy, said attorney Ivan Gold of Allen Matkins Leck Gamble Mallory & Natsis LLP. “No good deed goes unpunished,” he said. “This was to facilitate agreements so that people wouldn’t go bankrupt.” Read More