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Even small businesses doing well may need to brush up on the U.S. bankruptcy code -- particularly if they lease property. The uptick in bankruptcies declared by commercial landlords makes it vital to know: what happens to a commercial lease when the landlord declares bankruptcy?
As reported by the San Francisco Chronicle, the recent Chapter 11 bankruptcy filing by mall developer General Growth Properties was the largest real estate bankruptcy filing in U.S. history. General Properties owns over 220 malls around the country. Its representatives ensure that shoppers will not notice the company's restructuring.
Its tenants, however, may feel a bit less certain. As discussed regarding commercial leases of foreclosed properties, to commercial landlords, steadily paying tenants are particularly advantageous in these times. Nonetheless, if you lease, to protect your business you must be aware of the different possible scenarios that can follow your landlord's declaration of bankruptcy.
Three questions are key:
The bottom line is that commercial tenants need to monitor what happens with their landlord's bankruptcy because at multiple points the tenant may need to protect its rights. Being prepared in advance can allow commercial tenants to protect their rights and perhaps even cure some problems with their landlords' performance.
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.
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