Tenant Bankruptcy Lease Clauses
(Pro-Landlord)

Summary

These clauses may be used in a commercial lease to address the effect that the tenant bankruptcy will have on the lease. These clauses favor the landlord.. This template includes practical guidance and drafting notes. Once a tenant enters a Chapter 11 bankruptcy case and becomes a debtor in possession, it has the option of assuming (and perhaps assigning) or rejecting its unexpired lease. If a lease is assumed, the lease continues in full force and effect, and any defaults by the debtor must be cured and damages compensated. If the debtor tenant also assigns the lease, the landlord would acquire a new tenant. These clauses include certain lease terms a landlord might propose to effectuate an appropriate cure by a debtor tenant and compensation for damages in the context of an assumption of the lease. For more information, see Bankruptcy Risks to Landlord When Tenant Files a Bankruptcy Case and Assumption, Assignment, and Rejection of Executory Contracts.