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In its March decision In re: Cortlandt Liquidating LLC, the U.S. District Court for the Southern District of New York provided guidance on how to properly calculate a landlord's damages claim when a bankruptcy debtor rejects a lease.
When a bankruptcy debtor rejects a lease, the landlord is entitled to a rejection damages claim. Under Section 502(b)(6) of the U.S. Bankruptcy Code, the landlord's claim is capped at "the rent reserved by such lease, without acceleration, for the greater of one year, or 15%, not to exceed three years, of the remaining term of such lease."
In this Law360 article written by Restructuring & Bankruptcy partner Bethany Simmons and associate Noah Weingarten, the authors discuss the recent Cortlandt decision by the U.S. District Court for the Southern District of New York instructs courts to calculate a landlord's damages claim based on the time remaining on the lease rather than the rent, marking a departure from previous interpretations and setting a new precedent for bankruptcy proceedings in the district.
When a bankruptcy debtor rejects a lease, the landlord is entitled to a rejection damages claim. Under Section 502(b)(6) of the U.S. Bankruptcy Code, the landlord's claim is capped at "the rent reserved by such lease, without acceleration, for the greater of one year, or 15%, not to exceed three years, of the remaining term of such lease."
In this Law360 article written by Restructuring & Bankruptcy partner Bethany Simmons and associate Noah Weingarten, the authors discuss the recent Cortlandt decision by the U.S. District Court for the Southern District of New York instructs courts to calculate a landlord's damages claim based on the time remaining on the lease rather than the rent, marking a departure from previous interpretations and setting a new precedent for bankruptcy proceedings in the district.
