What Do I Do If One of My Commercial Tenants Declares Chapter 11?
If you own commercial real estate in New York, and one of your tenants just declared Chapter 11 bankruptcy , you need to know your rights and responsibilities. When Commercial Tenants Go Bankrupt No one runs a business expecting it to fail. Your tenants signed their leases fully believing that they would have no trouble paying your rent. But things can happen — from pandemics, to recessions, to sudden illnesses. If you have been notified that one of your tenants declared Chapter 11, this is what you should expect. Automatic Stay Say your tenant was behind on their rent, and you were trying to collect. Under the automatic stay provision under 11U.S.C. Section 362 of the Bankruptcy Code, once a bankruptcy petition is filed you have to immediately stop any attempts at collection. You are now legally prevented from trying to reclaim back rent, ending the lease early, or evicting the tenant for non-payment. And if you have some sort of bankruptcy clause in your l...