Commercial Tenants' Strategies for Avoiding or Delaying Rent Payments

The economic damage many businesses have suffered as a result of the COVID-19 pandemic has led to an increase in commercial tenants seeking to avoid or delay making rent payments, including extending beyond the 60-day period permitted under section 365(d)(3) of the Bankruptcy Code. Additional time can prove critical for debtor-tenants, in particular for businesses such as movie theaters, restaurant or retail stores where rent comprises a large part of the post-petition expense and where they were forced to close by government mandate.

In this Reuters’ article authored by Loeb & Loeb Restructuring & Bankruptcy lawyers Schuyler Carroll, Bethany Simmons and Noah Weingarten, the writers outline three main strategies debtor-tenants have employed to avoid or delay paying rent. The authors also discuss several risks and options that commercial landlords should consider when facing bankrupt tenants who have used these strategies for abating or postponing rent.