In re R. Ring Enterprises, Inc., 2009 Bankr. LEXIS 685 (Bankr. N.D. Cal. Feb. 18, 2009)

In re R. Ring Enterprises, Inc., 2009 Bankr. LEXIS 685 (Bankr. N.D. Cal. Feb. 18, 2009)

 
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In this LexisNexis Emerging Issues Analysis, Deborah J. Piazza examines In re R. Ring Enterprises, Inc., 2009 Bankr. LEXIS 685 (Bankr. N.D. Cal. Feb. 18, 2009), in which the issue was whether a debtor could indefinitely extend the time to assume or reject its nonresidential real property leases under 11 U.S.C. § 365(d)(4) if it filed, but did not confirm, a plan which included the assumption of such leases.

The author writes: Since the enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCPA"), there has been extensive analysis and discussion regarding a debtor's time to assume or reject nonresidential real property leases under section 365(d)(4) of title 11 (the "Bankruptcy Code"). Prior to BAPCPA, a debtor would routinely request, and often be granted, several extensions of time to assume or reject its unexpired nonresidential real property leases. This was typical of a chapter 11 debtor, especially in large retail cases where a debtor's leasehold interests were often the most valuable asset in the bankruptcy estate. BAPCPA has changed that strategy for debtors.

Under BAPCPA, section 365(d)(4) of the Bankruptcy Code was revised to provide that a debtor must assume or reject its nonresidential real property leases within 210 days (120 days, plus a 90 day extension for cause). The debtor may only receive a further extension if the landlord consents to such extension. In today's depressed real estate market, it may not be a problem to receive the landlord's consent to an extension of time. However, once the market turns, will landlords be willing to allow debtors to continue to extend their time to assume or reject leases and maintain control over the landlord's property? While many debtors and debtors' attorneys have had much anxiety over such time restrictions, the Bankruptcy Court in In re R. Ring Enterprises, Inc., 2009 Bankr. LEXIS 685 (Bankr. N.D. Cal. Feb. 18, 2009) may have offered everyone a solution.

In In re R. Ring Enterprises, Inc., the court made clear that for a debtor to assume or reject a nonresidential real property lease in a timely manner the debtor need only act within the time limitations set forth in the Bankruptcy Code, not the Court. Hence, as long as the debtor has filed a motion or plan which provides for the assumption or rejection of its leases prior to the expiration of the time as set forth in the Bankruptcy Code, the debtor will have effectively extended its time to assume or reject its leases. The quandary will then arise where, as in In re R. Ring Enterprises, Inc., the debtor has not obtained an order prior to the expiration of the applicable time period. Can a debtor be permitted to adjourn such motion or plan confirmation in perpetuity, thereby allowing for an unlimited extension of time? According to the court in In re R. Ring Enterprises, Inc., the answer is yes.
 
 
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