Amber Barlow | Partner
Deutsch Kerrigan
When a leased tenant files bankruptcy, the tenant may: (1) assume the lease, meaning the tenant will remain in the lease obligations or (2) reject the lease, meaning the tenant may extinguish lease responsibilities. In the time the tenant files bankruptcy and before the tenant decides to assume or reject the lease, they are required to make payments according to the terms of the lease. If the tenant fails to make payments, the landlord may seek a number of remedies with the court.
Barry Grodsky | Partner
Taggart Morton
At any time before a judgment of eviction is rendered, a tenant may file for bankruptcy. Most cases for individuals will be in Chapter 13, which requires the tenant to prepare a plan and to repay their debts that were due before the bankruptcy over a 60-month period. The filing of the bankruptcy creates an automatic stay, which will stop the eviction process. The stay, however, is not permanent, and the tenant will have to create the plan to repay the past-due rent over time and keep the lease current. If a judgment of eviction is rendered, however, the bankruptcy filing will offer no protection because if the lease is terminated, the bankruptcy’s automatic stay will not go into effect, so timing is very important for tenants.
Jonathan R. DeTrinis | Owner/Operator
DeT Law Firm
Filing bankruptcy (chapters 7, 11 and 13) can be utilized to secure a variety of legal and financial benefits for good people/businesses that are going through tough times. One of the most important benefits afforded to a person or business filing bankruptcy is the “automatic stay” protection that they immediately receive upon the filing of their case. This protection acts as a legal blockade against creditors’ collection actions outside of bankruptcy court. Since this “automatic stay” effectively halts all collection actions from moving forward, a tenant could utilize bankruptcy for a variety of reasons, including but not limited to, stopping/delaying lawsuits, such as eviction proceedings; buying themselves more time to work out alternative arrangements; catching up on past-due rent; or blocking all communication from harassing landlords.
Albert J. Derbes, IV | Co-Managing Member
Derbes Law Firm, LLC
Bankruptcy reorganization for businesses under Chapter 11 (as well as for eligible small businesses under the new subchapter V of Chapter 11), can afford short term protection from eviction because of the “automatic stay.” This respite can provide the tenant/debtor an opportunity to “cure” the non-payment or other default and “assume” the lease. Bankruptcy reorganization also provides an opportunity to negotiate what are hopefully mutually satisfactory payment terms with the landlord in a confirmed plan of reorganization.
Jill A. Gautreaux | Partner
Kean Miller LLP (New Orleans Office)
The landlord is prevented from initiating and prosecuting eviction and other state court enforcement proceedings. The tenant enjoys a lengthy period of time to decide whether to continue or terminate the lease. In order to assume the lease, the tenant must promptly cure any lease defaults. If the tenant assumes the lease, [they] may assign it to a third party, notwithstanding any assignment restrictions in the lease. Additionally, the bankruptcy court is granted broad jurisdiction to preside over damages and back rent claims. The landlord’s claims under a rejected lease for damages as a result of the terminated lease are capped by the Bankruptcy Code.
