lease on a building

[Dis0314]

I recently filed chp7 and one of the items included was a lease agreement on a warehouse, currently 10days past due on payment.

Does the bankruptcy prevent them from locking me out of my warehouse for a period of time?

[bcohen]

The automatic stay will protect you, but only for a limited time, because the landlord will likely file for relief from the stay in order to regain possession of their leased premises. Be advised that in many states, for a commercial property, the landlord would be able to seize any property left inside the building once they obtain their judgment for possession. Therefore, if you have anything valuable inside that warehouse, and you don't plan on bringing the rent current very soon, I would recommend taking those items out and storing them somewhere else.

[Dis0314]

I plan on having everything out within two weeks. We are in Texas, do you think he can make things happen that fast?

[despritfreya]

Assuming the lease is in your name and NOT the name of an entity such as a corporation or LLC, you no longer control the lease or the property contained within the building. That control is now in the hands of the Chapter 7 Trustee. The lease is subject to the requirements of 11 USC 365 and may be rejected or assumed by the Trustee under the requirements of that Code provision. The non-fixturized property contained within the building is property of the bk estate and it will be up to the Trustee to determine if any of it is worth selling (subject to any exemption you may be entitled to). Please do not try to gain possession or control of property that no longer belongs to you. Your Trustee will deal with this.

If the lease is in the name of the entity and the property contained within the building belongs to the entity your bk has no impact.

I trust you have an attny as it appears your case is not a cookie cutter bk.

Des.

[bcohen]

I plan on having everything out within two weeks. We are in Texas, do you think he can make things happen that fast?

Assuming that the lease is in your name, as despritfreya alluded to, and not in the name of an LLC or other entity, the automatic stay will prevent the landlord from doing anything until he/it requests and obtains permission from the bankruptcy court. It would definitely take more than 2 weeks to obtain relief from the automatic stay AND serve you with an eviction suit AND obtain the judgment for possession, which must happen before your property inside the building can be seized for nonpayment of rent. Of course, if the lease is NOT in your name, then the bankruptcy has no effect, and you better get your stuff out of there ASAP.

Assuming the lease is in your name and NOT the name of an entity such as a corporation or LLC, you no longer control the lease or the property contained within the building. That control is now in the hands of the Chapter 7 Trustee. The lease is subject to the requirements of 11 USC 365 and may be rejected or assumed by the Trustee under the requirements of that Code provision. The non-fixturized property contained within the building is property of the bk estate and it will be up to the Trustee to determine if any of it is worth selling (subject to any exemption you may be entitled to). Please do not try to gain possession or control of property that no longer belongs to you. Your Trustee will deal with this.

Assuming the above scenario (lease is in the individual filer's name and property within the building is owned by him) how exactly does having the property remain in the leased building versus pulling it out and storing it in his home, or having it in the trunk of his car make any difference? It is my understanding that the bankruptcy estate includes ALL non-exempt property owned by the debtor on the date of filing--regardless of where located, and that moving or using this property during the pendency of the case is fine as long as it is not being done to defraud the bankruptcy trustee. In other words, as long as the property was properly declared on his petition and schedules, why wouldn't it be prudent to move it and store it elsewhere so that when the landlord eventually files for possession, he/it does not seize the property?

[despritfreya]

Assuming the above scenario (lease is in the individual filer's name and property within the building is owned by him) how exactly does having the property remain in the leased building versus pulling it out and storing it in his home, or having it in the trunk of his car make any difference? It is my understanding that the bankruptcy estate includes ALL non-exempt property owned by the debtor on the date of filing--regardless of where located, and that moving or using this property during the pendency of the case is fine as long as it is not being done to defraud the bankruptcy trustee.

The problem is that we are not dealing with consumer goods. It is, I presume, business equipment, inventory etc. There may be competing interests here that we are not aware of - between the landlord and the trustee - maybe a purchase money lender or even a blanket security agreement such as what is used by the SBA. It should be up to the Trustee to take control of the property of the estate that is in the hands of a 3rd party. If the Trustee directs the debtor to do this, so be it, but not before. Further, if this was an on-going business the Trustee has a duty to shut it down and properly secure the assets.

In cases such as this, I probably would have suggested removing and storing the property prior to filing. But, once filed, my first call is to the Trustee whose job is to go to the property, inventory the equipment and secure it.

Des.

[Dis0314]

its under my personal name but a corp subleases from me. They were already in the process of moving since my lease is up in a couple months and i just want to make sure they had time to finish moving without interuption.