Breaking a lease Chapter 7

[LeslieF]

I own a small retail business that has been hit hard by the recession. I have 4 years left on my rental lease and do owe back rent of about $8000. I am looking at a chapter 7. Once I file, will I be able to break my lease? Also, will my back rent be discharged in a chapter 7? I need all the advice I can get. Thanks in advance!

[MSbklawyer]

Is your business an artificial entity (i.e. corporation or LLC)? Is your business filing bankruptcy or are you filing bankruptcy or both? Did you personally guarantee the lease or is only the business liable?

Generally speaking though, you and /or your business will either reject or assume the lease in bankruptcy. Rejection is the functional equivalent of discharging a debt -- i.e. you walk away from the lease. Assumption is the funtional equivalent of reaffirming a debt. The back rent is usually a general unsecured debt if you decide to reject, but depending on your state's laws, the landlord may have a lien on everything you have on his premises.

[LeslieF]

breaking a lease

Is your business an artificial entity (i.e. corporation or LLC)? Is your business filing bankruptcy or are you filing bankruptcy or both? Did you personally guarantee the lease or is only the business liable?

LOVE your disclaimer! I gotta keep my sense of humor going thru all this or I will be screwed. Anyway...my business is a corporation. I believe I will be filing mostly a personal bk chapter 7 but i am not sure. i think i personally guaranteed the lease but until i take a look at it i just dont know. my hope is that the $8000 i owe in back rent will be discharged and if i close the doors forever, i will be able to get out of the lease.

[Mensa1]

Assuming you have a copr and a pg on the lease, your pers ch 7 will negate your guarantee on the lease for both the current and back rent. LL will be able to come after any assets of the corp... (invetory, etc) Often times leases encumber inventory and other fixtures if you default on a comm'l lease.

Your corp will be toast after you default on the lease, but doesn't sound like that is going to be an issue at all. But post Bk 7 you will be shed of the problem personally.

[AngelinaCatHub]

Is your business an artificial entity (i.e. corporation or LLC)? Is your business filing bankruptcy or are you filing bankruptcy or both? Did you personally guarantee the lease or is only the business liable?

Generally speaking though, you and /or your business will either reject or assume the lease in bankruptcy. Rejection is the functional equivalent of discharging a debt -- i.e. you walk away from the lease. Assumption is the funtional equivalent of reaffirming a debt. The back rent is usually a general unsecured debt if you decide to reject, but depending on your state's laws, the landlord may have a lien on everything you have on his premises.

Greetings my friend. Haven't seen you enough. I always learn when you post. Also, I rolled over, hit the floor, hit my head and need stitches, after reading your signature. Hell, just that would make me hire you. An "Honest Lawyer" oxymoron.

Just one question. Can I sue you for this inconvenience? LOL. 'Hub