May 31, 2016

Major Retailers Filing for Bankruptcy

What you Should Know as a Landlord

While the year is not even halfway over, many major national retailers have already filed for bankruptcy in 2016. Some of the more familiar names involved in this corporate bankruptcy trend include Aeropostale, Sports Authority, PacSun, Fairway Market, and Vestis Retail Group, which operates chains Sport Chalet, Bob’s Stores, and Eastern Mountain Sports.

Many observers expect this trend to continue, as larger general retailers such as Target and Wal-Mart expand their product offerings and offer products at prices with which specialty retailers are unable to compete.

If you are a property owner that leases to one of these retailers or to another commercial tenant that you believe may be in financial trouble, you may be concerned about whether or not you will receive the rent that you are owed. Importantly, when companies file for bankruptcy, it does not necessarily mean that they will liquidate their assets or even cease operations – in fact, in most cases, filing for bankruptcy is intended to avoid these events from occurring.  

While filing for bankruptcy does provide companies with certain protections, landlords are not without recourse and can continue to collect rent or even evict tenants who are unable to keep up with the terms of their Chapter 11 plan.

If you are a landlord and your retail tenant files for bankruptcy protection, here are some of the issues that you need to consider:

  • Is the company planning on remaining a tenant?
  • When will any past-due rent be paid?
  • When will the “stub rent” be paid (the rent due for the period between the filing of the bankruptcy petition and the first post-petition rent payment)?
  • Are there any other damages that may be owed?

Because each bankruptcy case is different, it is impossible to say with any certainty what steps you should take as a landlord to ensure you collect any past-due rent. For this reason, landlords who find themselves with a bankrupt tenant should have their case thoroughly reviewed by a lawyer.

Contact a New Jersey Real Estate Attorney Today to Discuss Your Options

If you are concerned about collecting rent from a retail tenant that may file for bankruptcy, you should speak with an experienced attorney immediately. Doing so will ensure that your rights are protected and that you are able to able to collect as much as possible should your tenant file. To schedule a consultation with attorney Michael Alan Siddons, call our office today at 610-255-7500.