Article

Commercial Landlords (and Their Lenders) Beware: Bankruptcy Courts Are Shifting Risks to Lessors in Response to the Exigent Circumstances Brought on by COVID-19

The Real Estate Finance Journal

31 Mar 2021

Brett Miller, Mark Edelstein, and Erica Richards authored an article for The Real Estate Finance Journal about the impact of retail bankruptcies on commercial landlords and their lenders during the COVID-19 pandemic.

"The COVID-19 pandemic has triggered unprecedented levels of business disruption and forced numerous companies into bankruptcy in an effort to preserve dwindling liquidity and postpone creditor demands," the authors wrote. "Retailers, whose brick-and-mortar locations were already struggling to adapt to an increasingly online marketplace, have been among the hardest hit."

"A number of bankruptcy judges, faced with the prospect of an avalanche of forced liquidations, have thrown these debtors a lifeline by approving requests to suspend lease payments," they added. "This relief is a stark departure from prior precedent and could mean that commercial landlords will be disproportionately impacted should debtors prove to be administratively insolvent. The impact of this relief would, of course, filter through to commercial landlord lenders."

Read the full article, which was adapted from a previous client alert.

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