Alerts and Updates

The Court’s decision provides greater certainty for creditors who passively retain estate property that they obtained pre-petition.

This article was originally published on Law360.

The COVID-19 pandemic has caused, and continues to cause, massive humanitarian and economic upheaval with no clear end in sight. Borrowers are already scrambling to increase liquidity from their banks. Some will continue to operate openly, honestly, and in the best interests of the company and its stakeholders. Others will not.

2020年の初めに新型コロナウイルス感染症（COVID-19）パンデミックが広がり始めてから、その拡散を抑えるために全米の州知事が事業の閉鎖を命じる行政命令を出しました。多くの事業主が、事業閉鎖期間の賃料の支払義務から逃れるための救済手段を探ろうとして賃貸借契約書、特にその不可抗力(force majeure)条項を調べました。事業体やその弁護士は、今まで経験したことのない性質のパンデミックと相次ぐ事業閉鎖を目の当たりにしていますが、そのような重要事項の指針となる判例はわずかしかありませんでした。しかし、イリノイ州J.B.プリツカー知事がCOVID-19危機の対応策として、レストランに対して同施設で食事をする客に料理を出す(on-premises consumption)ことを禁じる行政命令を出した結果1、 Hitz Restaurant Group事件において、イリノイ州北部地区連邦破産裁判所は、近時、賃貸借契約書に含まれる不可抗力条項に基づき、テナント（賃借人）‐債務者の賃料支払義務は一部免除されると判示しました。

The ongoing COVID-19 pandemic has raised pressing questions about how a force majeure provision in a lease will affect a tenant's obligation to pay rent.

A Chicago bankruptcy court recently ruled in In re Hitz Restaurant Group that a debtor’s obligation to pay rent during its bankruptcy case may be temporarily reduced because of a force majeure clause in the lease and the governor’s COVID-19 stay-at-home order. Both landlords and tenants should be aware that this rent reduction was carefully crafted and was not unlimited by the court.

Widespread closures due to the COVID-19 pandemic have generated countless lawsuits across the country over missed rent payments. Defendants in these cases are often commercial tenants with conflicting obligations to pay rent under their leases, while also shuttering their doors in accordance with government stay-at-home orders.

Widespread closures due to the COVID-19 pandemic have generated countless lawsuits across the country over missed rent payments. Defendants in these cases are often commercial tenants with conflicting obligations to pay rent under their leases, while also shuttering their doors in accordance with government stay-at-home orders.

With the onset of closures and quarantines early this year due to the spread of COVID-19, businesses across the country were confronted with the issue of how to perform their contractual obligations while they were unable to operate under normal conditions (or, in some cases, unable to operate at all). In many instances, they could not.

Introduction

The financial distress caused by the COVID-19 pandemic has left many companies reeling. With no clear end in sight, the bad news is that some businesses will be forced to pursue options for winding down or reorganizing. The good news is, there are options.

Being in the cross-hairs of a client’s legal malpractice claim is a horrible-enough experience for any lawyer. Even worse would be if your house had to be sold in order to satisfy the former client’s default judgment against you, as the Seventh Circuit ordered in a case earlier this month.