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ARTICLE · 27 AUGUST 2014

Lease Termination: Do You Really Mean It?

A commercial landlord sought relief from the automatic stay so that it could complete prepetition eviction proceedings against the debtor.

United StatesReal Estate and Construction

In re 2408 W. Kennedy, LLC, 512 B.R. 708 (Bankr. M.D. Fla. 2014) –

A commercial landlord sought relief from the automatic stay so that it could complete prepetition eviction proceedings against the debtor. The debtor objected, arguing that it had a right to assume the lease. The case turned on whether the landlord effectively terminated the lease prepetition.

The debtor operated a nightclub at a location that it leased from the landlord. The landlord sent the debtor a default notice for failure to make lease payments and on the basis that the debtor defaulted on a promissory note that constituted a default under the lease through a cross-default provision.

Based on the cross-default, the landlord contended that the lease was "no longer in effect" and the debtor was "occupying the premises as a Tenant at Will." (There is an inference that the landlord relied on the cross-default because under state law the tenant would have had a right to cure the lease payment

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