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ARTICLE · 07 MAY 2014

Landlord Lease Claims: Avoiding the Statutory Cap – Round 2

Prior to bankruptcy the debtor vacated leased space before the end of the lease term. The landlord filed a proof of claim in the bankruptcy.

United StatesInsolvency/Bankruptcy/Re-Structuring

In re Healthy Hut Inc ., 506 B.R. 526 (Bankr. D. Haw. 2014) –

Prior to bankruptcy the debtor vacated leased space before the end of the lease term. The landlord filed a proof of claim in the bankruptcy. The debtor raised several objections, including an argument that the claim exceeded the statutory cap under Section 502(b)(6) of the Bankruptcy Code.

As a preliminary matter, the debtor argued that the landlord breached the lease by giving notice that it intended to "tent" the building to treat for termites, and alternatively that there was a mutual agreement to terminate the lease when it vacated the premises. However, the court noted that the landlord delayed the termite treatment until after the debtor moved out, and determined that the landlord never agreed to waive its claims for future rent or other damages. Which left the debtor's argument that the landlord claim exceeded the statutory cap.

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