Exculpation clauses limiting the liability of certain entities for actions taken in connection with a bankruptcy case are a common feature of chapter 11 plans. However, courts disagree.
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Friday, January 29, 2021
As discussed in a previous post, the Consolidated Appropriations Act of 2021 (the “Act”), which was enacted on December 27, 2020 in response to the economic distress caused by the COVID-19 pandemic, amended numerous provisions of the Bankruptcy Code. This post discusses amendments specifically affecting landlords.
First, the Act assists debtors by amending Section 365(d)(3) of the Bankruptcy Code to allow, at the bankruptcy court’s discretion, small business debtors experiencing pandemic-related financial hardship an extra 60 days, in addition to the initial 60-day grace period, to make payments under unexpired leases of non-residential real property following the bankruptcy filing date. Allowing small business debtors to defer rent for four months will improve their short-term cash liquidity at the start of their bankruptcy case, although such deferred payments would be treated as administrative expenses entitled to the highest priori