Which of the blunders by prior counsel in Chapter 13 threaten a problem for which no good fix exists? Failure to timely assume the lease for the sole proprietorship liquor store.
And it was a near run thing for me as well.
This couple brought me their pending Chapter 13, fraught with trustee objections, inconsistencies, and omissions, you name it. But the one rat’s nest which better information, better attention to facts, or an amendment wouldn’t fix is the business lease. Section 365(d) says the lease is terminated if not assumed within 120 days of the filing (or upon the earlier confirmation of a plan).
The clients diddled around signing and returning the representation agreement and retainer for my engagement, finally getting my office fully engaged Thursday after business hours.
Friday morning I sat down with the file and started work on the case by calculating when the 120 day period expired. Found out that the period ran Saturday. Another day or two, and the lease would have been rejected, dead and gone, and the Code calling for surrender of the premises to the landlord. Ouch.
Predictably for a troubled case, there wasn’t enough information to file the motion to assume the lease, so I filed a motion for an extension of time in which to do so. This deadline can be extended once, for good cause. Beyond that, thanks to BAPCPA, the landlord must consent to the extension.
Mercifully, I didn’t have to determine what effect dismissal of the case might have on this bankruptcy code provision: could a lease terminated by terms of the Bankruptcy Code be revived if the Chapter 13 was dismissed?
Note that 365 has different rules and time periods for leases of residential real property and personal property. Moral of the story: identify executory contracts in your first meeting with the client and get the applicable deadlines on your calendar.
Reread one of the very first posts on this site on the initial interview with the client.
Image courtesy GregWiese.