§ 28.06 Sample Bankruptcy Clause

• Jurisdiction: United States
• Publication year: 2022

§ 28.06 Sample Bankruptcy Clause

The following is a typical bankruptcy clause (with commentary) proposed by landlord during lease negotiations:

In the event Tenant shall become a debtor under a Chapter of the Code as it may be amended or under any successor statute thereto, and the Trustee of Tenant's property or Tenant shall elect to assume this Lease for the purpose of assigning the same or otherwise, such election and assignment may only be made if all of the terms and conditions of Sections ___.___ and ___.___ are satisfied. If such Trustee shall fail to elect or assume this Lease within the period permitted by law after the filing of the petition, this Lease shall be deemed to have been rejected. Landlord shall thereupon be immediately entitled to possession of the Demised Premises without further obligation to Tenant or the Trustee, and this Lease shall be cancelled, but Landlord's right to be compensated for damages in such liquidation proceeding shall survive.

No election by the Trustee or Debtor-in-Possession to assume, whether under Chapter 7, 11 or 13, shall be effective unless each of the following conditions, which Landlord and Tenant acknowledge are commercially reasonable in the context of a bankruptcy case of Tenant, have been satisfied, and Landlord has so acknowledged in writing:

(i) the Trustee or the Debtor-in-Possession has cured, or has provided Landlord adequate assurance (as defined below) that:

(k) no later than ten (10) days (counting the date of assumption as the first such day) from the date of such assumption, the Trustee will cure all monetary defaults under this Lease; and
(l) within thirty (30) days from the date of such assumption (counting the date of assumption as the first such day), the Trustee will cure all nonmonetary defaults under this Lease; and
(m) any obligations under the Lease that are unliquidated at the time of assumption, including without limitation repair, maintenance and replacement obligations and indemnification obligations shall survive, regardless of whether such unliquidated obligations existed, occurred, or accrued prior to the assumption of the Lease; and

(ii) the Trustee or the Debtor-in-Possession has compensated, or has provided to Landlord adequate assurance of future performance (as defined below) that within ten (10) days from the date of assumption, Landlord will be compensated for any pecuniary loss incurred by Landlord arising from the default of Tenant, the Trustee, or the

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