美国第七巡回法庭判决破产-申诉前的非居住性的租赁终止可撤销转让（ഘ

Even before Congress added section 365(c)(3) to the Bankruptcy Code in 1984, it was generally understood that a nonresidential real property lease which has been validly terminated under applicable law prior to a bankruptcy filing by the debtor-former tenant cannot be assumed or assigned in bankruptcy. Moreover, the terminated leasehold interest is excluded from the debtor's bankruptcy estate, and any action by the landlord to obtain possession of the formerly leased premises is not prohibited by the automatic stay.

However, a ruling recently handed down by the Seventh Circuit Court of Appeals indicates that, even if a nonresidential real property lease has been terminated prepetition, the termination may be avoidable in bankruptcy as a preferential or fraudulent transfer. In Official Committee of Unsecured Creditors v. T.D. Investments I, LLP (In re Great Lakes Quick Lube LP), 2016 BL 74950 (7th Cir. Mar. 11, 2016), the Seventh Circuit ruled that a debtor-tenant's voluntary prepetition termination of a commercial real estate lease may be an avoidable "transfer" under section 547 or 548 of the Bankruptcy Code, thereby allowing the bankruptcy trustee or chapter 11 debtor-in-possession ("DIP") to seek recovery of the value of the lease from the landlord.

Power to Assume or Reject Contracts Excludes Terminated Nonresidential Real Property Leases

Section 365 of the Bankruptcy Code authorizes a trustee or DIP to assume, assume and assign, or reject most kinds of executory contracts and unexpired leases.

However, section 365(c)(3) provides that:

[t]he trustee may not assume or assign any executory contract or unexpired lease of the debtor, whether or not such contract or lease prohibits or restricts assignment of rights or delegation of duties, if . . . such lease is of nonresidential real property and has been terminated under applicable nonbankruptcy law prior to the order for relief.

Correspondingly, section 541(b)(2) of the Bankruptcy Code provides that "property of the estate" does not include:

any interest of the debtor as a lessee under a lease of nonresidential real property that has terminated at the expiration of the stated term of such lease before the commencement of the case under this title, and ceases to include any interest of the debtor as a lessee under a lease of nonresidential real property that has terminated at the expiration of the stated term of such lease during the case.

In addition, the automatic stay in section 362 does not preclude any act to obtain possession of leased premises by a lessor under a nonresidential lease of real property "that has terminated by the expiration of the stated term of the lease" prepetition. 11 U.S.C. § 362(b)(10).

The purpose of all of these related provisions, which were added to the Bankruptcy Code in 1984, is to facilitate "the re-leasing of commercial property during bankruptcy proceedings by forbidding the trustee to interfere with the occupancy of the new tenants." Great Lakes, 2016 BL 74950, *3 (citing Robinson v. Chicago Housing...