Magazine article Journal of Property Management

At Last-Bankruptcy Reform Nears

Magazine article Journal of Property Management

At Last-Bankruptcy Reform Nears

Article excerpt

After a near miss in 1998, it appears fairly likely that several related bankruptcy provisions may at last be passed by Congress. This passage-which IREM has been working on for several years-will provide important safeguards to protect the investments of real estate owners from defaulting tenants or overeager creditors.

The first of these three measures, each of which was once a separate bill, would eliminate the $4 million cap on single-asset bankruptcies and subject all properties to an automatic 90-day stay from creditors. By replacing a twotiered law that provided longer stays for properties of higher value, the new provisions will ensure more equal treatment for creditors while providing a window of time for financially troubled owners to develop a reorganization plan.

The second of the three bankruptcy reforms would close a loophole in current law that permits residential tenants to avoid eviction by declaring bankruptcy. A third, related provision would set a cap on the time granted a bankrupt shopping center tenant to assume or reject a lease. This measure also gives the owner more control over liens and lease extensions at the property In both instances, these new laws provide powerful weapons to real estate managers faced with insolvent tenants. …

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