“I have this lease that is killing my business. Can I get out from under it in bankruptcy?” The answer to that question is yes. One of the primary benefits of the bankruptcy code is that you can do what’s called rejecting leases. You can also reject contracts under most circumstances.
What that means is you get out from under that lease or contract that you find burdensome and all that the lessor or landlord has is an unsecured claim for the damages that are arising as a result of that breech. Sometimes that gives the landlord a lot of power in your bankruptcy but many times you’re going to file a Chapter 7 individual bankruptcy and you’re going to get out from under the personal guarantees or other damages or other claims that might arise from the rejection of that unexpired lease of real property or of personal property.
So rejection of these leases is an extremely valuable benefit in Chapter 11, Chapter 7 or Chapter 13 bankruptcy.
Thoughts from a Maryland Bankruptcy Lawyer
Ronald J. Drescher
Drescher & Associates, P.A
4 Reservoir Circle
Baltimore, MD 21208
Fax (410) 484-8120
Practicing in Maryland, Delaware, Virginia, Pennsylvania