Case Law Summaries

In Re Slack

• Opinion Date: March 26, 2003
• Real Property Law
• E-Mail

BANKRUPTCY; LEASES—Even if a tenant does not list its landlord as a creditor, the lease is deemed rejected sixty days after a bankruptcy petition is filed if not expressly assumed in that time.

A commercial tenant filed for bankruptcy under Chapter 13. He did not list his landlord as a creditor. Only when the landlord appeared in state court to obtain a default judgment against the tenant, did the landlord find out that his tenant had filed for bankruptcy. The tenant then amended Schedule F of his Chapter 13 petition to include the landlord as a pre-petition unsecured creditor. The plan had already been approved at a zero dividend. The landlord argued that because he was not listed on the original petition, his claim for a breach of the lease was post-petition and, further, his tenant had, in bad faith, intentionally omitted his name as a creditor in the original bankruptcy petition. The Bankruptcy Court ruled against the landlord, pointing out that whether or not the landlord was listed as a creditor, commercial leases are deemed rejected sixty days after the filing of the bankruptcy petition if not assumed by the trustee in that period of time. The rejection is treated as having occurred as of the filing date of the petition. As a consequence, the landlord’s claim was not for post-petition damages, but was in the nature of a lease rejection claim. Although it is not clear whether an omitted creditor may file a late proof of claim, in the District for New Jersey, “a creditor that is added to a bankruptcy petition by way of an amendment to the schedules is afforded sixty days from the date of the amendment to file a proof of claim.” Here, the landlord was aware of the schedule amendment, and, in fact, had filed a timely claim under that rule.

Copyright ©2003. Meislik & Meislik. All rights reserved.