Solvent Shopping Center Tenants Reexamination in Light of In re Trak Auto Corp. Part I

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Dec/Jan 2004

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Approximately half of all
U.S. retail trade is conducted in shopping centers. The
International
Council of Shopping Centers estimated shopping center sales at $1.98

trillion last year.

The success of shopping centers depends on the
operation of a carefully chosen mix of stores. A shopping center has
been
described as similar to a small town, with "a delicate balance of
merchants."<a href="#2" name="2a">2</a>

Eliminate one merchant from the mix, and the effect
may ripple through the entire town.

Congress had the well-being of shopping center lease
tenants in mind—as well as owners, developers and
landlords—when it built specific provisions into the U.S.
Bankruptcy
Code to ensure that the delicate balance of retail stores within
shopping
centers is preserved, even when an individual tenant goes bankrupt.

With this context in mind, we consider In re Trak Auto
Corp.,<a href="#3" name="3a">3</a> a
decision issued on April 22, 2004, by the U.S. Fourth Circuit Court
of
Appeals. Trak Auto is a victory for shopping center
landlords—and, by implication,
non-bankrupt tenants—in recognizing the limits imposed by law
upon a
debtor-tenant's efforts to assign its leasehold interests in a
manner
contrary to the terms of its lease. Trak Auto also invites a
reexamination of other tools Congress
made available to landlords and solvent tenants in a shopping center
to
ensure that the rights they bargained for when they signed their
leases are
preserved.

In particular, solvent tenants—as well as
shopping center owners, developers and landlords—should give
serious
consideration to §365(b)(3)(D) of the Bankruptcy
Code<a href="#4" name="4a">4</a> as a tool
for preserving tenant mix and category exclusivity within a shopping
center
that has lost a fellow tenant to bankruptcy.

This article also examines the implications of the Trak
Auto decision
regarding an increasingly prevalent phenomenon: the sale of
so-called
"designation rights" in bankruptcy.

<h4>Historical Background to Landlords' Victory in Trak
Auto</h4>

Shopping center tenants are not randomly chosen and
assigned to available stores, but carefully selected, often in
accordance
with a master plan. When a master plan has been created, it is
typically
preserved through a series of restrictive clauses included in each
lease as
well as constant monitoring designed to ensure that the balance
within the
shopping center community is preserved.

Both tenants and landlords have a reasonable
expectation that their relationships will be governed by carefully
drafted
executed leases and painstakingly negotiated restrictions on the use
of
leased premises. But what if one of those tenants seeks bankruptcy
protection?

On the date of a bankruptcy filing, those lease
clauses and restrictions become subject to the provisions of the
Code and
to courts' interpretations of the meaning of those provisions.
Following enactment of the Bankruptcy Reform Act of 1978, however,
some
bankruptcy courts interpreted the statute to invalidate such
restrictive-use clauses contained in leases, which led to permanent
modifications of lease terms.

Older leases with contractually fixed below-market
rent are a valuable asset. The debtor frequently wishes to sell or
assign
his lease to the highest bidder to maximize value for the estate.
This goal
may or may not be aligned with promoting the overall well-being of
the
shopping center. The landlord and its non-debtor tenants, however,
have a
vested interest in the continuing success of the center. For this
reason,
they hope to preserve bargained-for clauses in their leases along
with the
overall tenant mix and balance in the center.

Congress was receptive to the concerns of landlords
and their non-debtor tenants regarding the negative impact that a
lease
assignment may have on tenant mix and balance in shopping centers.
The
Bankruptcy Reform Act of 1984 (1984 Amendments) ensured that the
delicate
balance bargained for by the original parties would not be disturbed
by one
or more insolvent tenants. To achieve this purpose, the 1984
Amendments
required that the assignee honor the restrictions bargained for by
the
landlord and non-debtor tenants.

The Code provides that a trustee or
debtor-in-possession (DIP)<a href="#5" name="5a">5</a> may assign an unexpired lease only if the
new
tenant gives adequate assurance of future performance.<a href="#6" name="6a">6</a> Section
365(b)(3) provides that assignment of a shopping center lease
requires
adequate assurance that such assignment:

<ul>
<li>is subject to all lease provisions, including
restrictions as to radius, location, use or
exclusivity;<a href="#7" name="7a">7</a>

</li><li>will not breach any such provision contained in
any other lease, financing agreement or master agreement relating to
such
shopping center;<a href="#8" name="8a">8</a> and

</li><li>will not disrupt any tenant mix or balance in
the shopping center.<a href="#9" name="9a">9</a>
</li></ul>

Though Congress's intent seems clear, the Code
contains a seeming contradiction between two sections:
§365(b)(3),
which conditions the assignment of a shopping center lease on rigid
adherence to the requirements of restrictive use clauses and tenant
mix and
balance, and §365(f)(1), which permits the assignment of a
lease
notwithstanding any provision of the lease that prohibits, restricts
or
conditions such assignment. In Trak Auto, the Fourth Circuit
confronted this apparent
contradiction.

<h4>Permitted Uses Only, Please</h4>

The debtor, Trak Auto Corp., was a retailer of auto
parts and accessories. In a bid to reorganize following a bankruptcy

filing, it sought to assume one of its leases and assign it to a new

tenant. Provisions of the lease restricted the use of the premises
to the
retail sale of automobile parts and accessories.<a href="#10" name="10a">10</a>

When none of the bids for the store lease came from
an auto parts chain, Trak Auto sought to assign the lease to
the highest bidder: a
discount clothing store.

The landlord objected on two grounds. First, the
landlord argued that the proposed assignment was inconsistent with
the use
clause contained in the lease. Additionally, the landlord claimed
that a
change in use would disrupt the tenant mix in violation of
§365(b)(3)(D). Trak Auto countered that those lease
restrictions were
unenforceable anti-assignment provisions under §365(f)(1) and
that, on
the facts of the case, assigning the lease to a clothing store would
not
disrupt the tenant mix.

<h4>Lease Restriction Denied</h4>

The bankruptcy court found that the area where the
shopping center was located was saturated with auto stores to the
point
that no prospective assignee would bid on the store for that use.
The court
noted that the use provision permitted only auto stores named "Trak
Auto" and that this limitation had the effect of prohibiting leasing

to anyone but the original tenant. According to the bankruptcy
court, such
restrictions constitute de facto anti-assignment provisions.
In reaching its decision, the
court relied heavily on the often-cited In re
Rickel Home Centers Inc., which held that where
compliance with a use clause is impossible or where a use
restriction has
been so broadly drafted as to constitute a de
facto anti-assignment clause, the clause may be
stricken from the lease in its entirety.<a href="#11" name="11a">11</a>

The bankruptcy court in Trak Auto concluded that the
landlord did not
present sufficient evidence to support a finding that the proposed
assignment of the lease would disrupt the tenant mix or that "the
alleged tenant mix was part of the bargained-for exchange of its
lease and
the leases of the other tenants."<a href="#12" name="12a">12</a> In the court's view,
the fact that there were many stores in the area that the landlord
did not
control did not help its plea that protection of the use clause was
essential to preserve the bargained-for tenant mix. Accordingly, the
court
allowed the assignment.

On appeal, the district court affirmed. Relying on Rickel,
that court held
that the lease clause limiting use of the premises to a "Trak
Auto" store was unenforceable. The court found the clause to be
inconsistent with the underlying policies of the Bankruptcy Code, as
it had
the effect of prohibiting assignment of the lease to anyone other
than the
original tenant. Even though the landlord did not rely on the lease
restriction mandating that the premises be used "only as a Trak Auto

Store," the court focused on the language of the lease itself.

<h4>Reversed on Appeal</h4>

The Fourth Circuit Court of Appeals reversed.
Resolving the conflict between §365(f)(1) and
§365(b)(3)(C), the
court reasoned that §365(b)(3)(C) controls as the more specific

provision, and accordingly held that the original agreement between
tenant
and landlord cannot be modified by the courts when a tenant seeks
protection under the Code.

The Fourth Circuit found the legislative history of
§365(b)(3) to be highly relevant in determining how to resolve
the
conflict between §§365(b)(3)(C) and 365(f)(1). According
to the
court, this history reflects congressional efforts to protect
shopping
center interests.

Both prior to and after the passage of the 1978 Act,
one way in which shopping center landlords have maintained the
desired
tenant mix and balance is by placing use restrictions in their
leases.
Prior to the passage of the 1978 Act, a tenant's leasehold interest
did not automatically become property of its bankruptcy estate.
Moreover,
the typical lease was likely to contain a provision giving the
landlord an
option to terminate the lease in the event that the tenant filed for

bankruptcy protection.

With the passage of the 1978 Act, landlords were no
longer able to regain control of leased property in the event of
bankruptcy, as leasehold interests routinely became part of the
debtor-tenant's estate. Congress was persuaded, however, that
shopping center interests needed special protection. The 1978 Act
provided
that a debtor-tenant could not assign its lease unless there was
adequate
assurance that "assignment of [the] lease [would] not breach

substantially any provision,
such as radius, location, use or exclusivity provision in any
other lease, financing
agreement or master agreement relating to such shopping
center."<a href="#13" name="13a">13</a>

Such protection of the interests of landlords and
non-debtor tenants proved to be illusory. Debtors were able to
convince the
courts that even though an assignment would breach a use provision
in the
lease sought to be assigned, the assignment could proceed because
the 1978
Act only prevented assignment if some other lease or
agreement relating to the shopping center
would be breached. Effectively, these debtors nullified
§365(b)(3).

With the enactment of the 1984 Amendments, Congress
responded to the pleas of shopping center interests that the
practice of
avoiding use restrictions was creating problems with tenant mix and
balance
in affected shopping centers. Specifically, "affected centers...were

losing their balance of merchandise drawing card, which was a threat
to
overall sales revenues in the shopping center sector of the
economy."<a href="#14" name="14a">14</a>
Accordingly,
Congress amended subsections (C) and (D) of §365(b)(3) by
deleting
the word "substantially" from the provisions requiring that an
assignment of a shopping center lease not violate use restriction or

disrupt tenant mix. Second, subsection (C) was amended to provide
that any
assigned shopping center lease would remain subject to all
provisions of
the lease and not just the provisions of "any other lease"
relating to the shopping center.

<h4>Section 365(b)(3)(C) Controls over §365(f)(1)</h4>

The Fourth Circuit resolved the apparent conflict
between §365(f)(1) and §365(b)(3)(C) by relying on the
canon of
statutory construction that holds that a more specific provision
applicable
to the issue at hand controls over a more generalized provision.
Section
365(b)(3)(C) is more specific in that it directly addresses whether
a
debtor-tenant assigning a shopping center lease must honor a
straightforward use restriction.

This conclusion is supported by the legislative
history, which demonstrates that Congress's purpose in enacting the
1984 Amendments was to preserve bargained-for protections with
respect to
the use of premises and other matters spelled out in the
debtor-tenant's lease. Congress has effectively put shopping center
leases in a special category, making it more difficult for
debtor-tenants
to assign these leases in chapter 11.

The court concluded that because the intended
assignee of the Trak Auto lease did not plan to take the lease
subject to
restrictions limiting use of the premises to an auto parts and
accessories
store, Trak Auto's motion to assume and assign the lease must be
denied.

The court then turned to an analysis of what is left
of §365(f)(1) in light of its ground-breaking opinion. First,
the
court noted that its decision does not mean that §365(f)(1) can
never
be used to invalidate a clause prohibiting or restricting assignment
in a
shopping center lease. The court explained that a shopping center
lease
provision designed to prevent any assignment whatsoever might be a
candidate for the application of §365(f)(1). In support of such

reasoning, the court referred to the legislative history, quoting a
statement by Sen. Orrin Hatch (R-Utah), who, in explaining the 1984
Amendments, said that the "amendment is not intended to enforce
requirements to operate under a specified trade name."<a href="#15" name="15a">15</a> The court
concluded that Sen. Hatch's comment suggests that Congress did not
intend to make §365(f)(1) completely inapplicable to shopping
center
leases. The issue as to when §361(f)(1) applies was left "for
some future case."<a href="#16" name="16a">16</a>

Clearly, this decision marks a turning point in the
way many bankruptcy courts will approach the specific use
restriction
provisions included in shopping center leases. Instead of
invalidating them
as de facto
anti-assignment clauses, courts following Trak
Auto will honor such clauses, thereby
respecting the rights of landlords. This result also bodes well for
the
rights of non-debtor tenants in a shopping center. Even though the
victory
was the landlord's, the court reached its opinion based on
legislative history, which demonstrates that the 1984 Amendments
were
enacted for the benefit of landlords and non-debtor tenants
alike.<a href="#17" name="17a">17</a>

Notably, the lease that the debtor-tenant sought to
assign contained a clause mandating that the tenant use the premises

"only as a Trak Auto store," thus effectively making the lease
non-assignable. The landlord, however, did not seek to enforce this
particular clause to restrict assignment to a tenant operating as a
Trak
Auto store. Thus, the "Trak Auto store" designation was not a
consideration in the court's holding in the case.

Because the Fourth Circuit disposed of the case
based on its analysis of §365(b)(3)(C), the court did not
consider
issues of tenant mix and balance arising under §365(b)(3)(D),
or the
issue as to how §§365(b)(3)(C) and 365(b)(3)(D) interact.

The last chapter on the interrelationship between
§§365(f)(1) and 365(b)(3) has yet to be written, but the
Rickel decision provides
insight into what may come.

<h4>Trak Auto Did Not Reject Rickel</h4>

The Trak Auto decision has already been interpreted by
some commentators
as disagreeing with the often-cited In re
Rickel Home Centers decision and calling into
doubt the cases that follow Rickel's reasoning.<a href="#18" name="18a">18</a> Nevertheless, while the
Fourth Circuit
overruled the lower courts' decisions, both heavily relying on

Rickel, Trak Auto is factually
distinguishable. In fact, when the Fourth Circuit spoke of a
"shopping center provision designed to prevent any assignment
whatsoever" being "a candidate for the application of
§365(f)(1),"<a href="#19" name="19a">19</a> it is the Rickel decision that
comes to mind.

In Rickel, the debtor, a home-improvement store operator,
sought to
assign its numerous shopping center leases to Staples, the
office-supply
store chain. Use restrictions in the various leases ran the gamut.
One of
the leases sought to be assigned limited the tenant use to a "home
improvement center."<a href="#20" name="20a">20</a> Similarly, another lease sought to be
assigned, provided that the "[t]enant may use the premises as a
Channel Home Center similar in operation to a majority of the
Channel Home
Centers then in operation in New Jersey [and] for no other
purpose."<a href="#21" name="21a">21</a>

Others
were more or less restrictive. Objecting landlords argued that these

restrictions were important to preserving the tenant mix in their
shopping
centers.

The district court, which heard the matter in the
first instance, found that the use provisions contained in the
leases
constituted de facto anti-assignment clauses, and permanently
struck the provisions
from the leases as invalid under §365(f)(1) of the Code. The
court
based its ruling on the debtor's unrebutted proffer, which the court

found to be credible, that the typical Channel Home Center or
"home-improvement center" referred to in the leases had
"either become obsolete or is struggling to remain in existence, as
a
result of the advent of warehouse type home-improvement stores like
Home
Depot."<a href="#22" name="22a">22</a> In
essence, it was "impossible" to comply with
the restriction clauses contained in the leases because the
operation
described in the lease simply did not exist or, at most, was
irretrievably
doomed to extinction. Neither landlord nor tenant was able to find
"a
single viable entity engaged in the home-improvement
business"<a href="#23" name="23a">23</a> able
to operate in the square footage of the debtor's stores.

The court noted that §§365(b)(3)(C) and
365(f)(1) must be read together: §365(f)(1) renders
unenforceable not
only those lease provisions that prohibit assignment outright, but
also
lease provisions that are so restrictive as to constitute de
facto assignment clauses.
Given that the market for Rickel-size home-improvement
centers is "either non-existent
or in dire straits,"<a href="#24" name="24a">24</a> such a limitation would make it
impossible for the debtor to assign to any entity. Accordingly, the
court
struck the provisions permanently from the leases.

<h4>Comparing Rickel with Trak Auto</h4>

Impossible vs. uneconomical is the major distinction
to be made between the facts of the two cases. In Rickel, the
Rickel-size
home-improvement store was found to be obsolete—hence, the
debtor
could never assign a lease containing such a restriction. In Trak
Auto, the market was
saturated. Saturation is a relative concept, which fluctuates
depending on
market conditions. While the use clause in Rickel effectively
barred any assignment whatsoever, the use
clause in Trak Auto made
the assignment economically unattractive based on present market
conditions.

An analogy may be illustrative of this distinction.
Applying the reasoning of Rickel, a lease provision
restricting use to stores specializing in
selling hand-written and hand-bound encyclopedias most likely would
be
found to be so restrictive as to constitute a de
facto anti-assignment clause. In contrast,
a lease provision limiting use to bookstores "selling
encyclopedias" may or may not be overly restrictive depending on
current market saturation in the area.

In the case of auto parts, market saturation will
certainly change, making it possible to assign, if not now, then
later.
Unlike Rickel-size home-improvement centers, the auto-parts industry
is
alive and well.

Public policy considerations bear out the
significance of this distinction. Had the Rickel court upheld
the de facto anti-assignment clauses at issue, the landlords
would have
obtained not the benefit of their original bargains, but the
inevitable
reversion of the debtor's leasehold interests to the landlords. Such

a holding would have produced an assured windfall for the landlords,
who
could re-let the properties for alternative, non-restrictive uses at
market
rates. The actual holding in Rickel effectively preserved
this value for the benefit of
creditors.

By contrast, the debtor in Trak Auto could have held its
properties for future assignment at such time as market conditions
may have
changed. In the alternative, if the carrying cost of the leases had
made
this option impracticable, the debtor could have sold designation
rights in
the properties, deferring and preserving the issue of compliance
with all
applicable requirements of §365(b)(3) until such time as a
proposed
assignee and intended use were identified.

<h4>Impact on Sales of Designation Rights</h4>

The Trak Auto decision will have significant consequences,
mostly
related to the practice of selling designation rights pursuant to
§§363 and 365 of the Code. In essence, the basic idea of
such
sales is that the debtor transfers to a third party its right to
control
the disposition of its leasehold interests and agrees to assign its
leases
to the purchaser's designees. The process usually involves extensive

marketing of leasehold assets to potential bidders, followed by an
auction
process. The primary objective of the bidding process is to identify
the
highest bidder. Designation rights deals bring immediate liquidity
to the
bankruptcy estate while allowing the debtor to focus on issues other
than
marketing unwanted leases. Typically, such leases will have value to
the
third parties mostly because their rental rates are below-market,
but also
because historically, a debtor has been able to sell and assign
leases to
third parties notwithstanding restrictive provisions included in
such
leases. In addition to permanently striking restrictive provisions
included
in the leases, bankruptcy courts have been willing to make a new
tenant's life easier by allowing time for property improvements. For

example, the courts will authorize debtors to allow their premises
to
remain "dark" for a limited period of time, contrary to the
"going dark" prohibitions contained in standard commercial
leases.

At times, the practice of designating leasehold
rights for future assignment has had a negative impact on non-debtor

tenants in the shopping center. First and foremost, these tenants
are
usually not notified before the bidding process, and may find out
who the
new tenant is only after the designation process has been completed,
when
it may be too late to object. The unfortunate practice of no
notification
or untimely notification may persist even though the due process
rights of
non-debtor tenants, including timely notice and a fair hearing, may
be
violated.

Debtors and putative purchasers of designation rights
have been heard to argue, in at least one instance, that this result
may be
inevitable given the difficulty in ascertaining who the affected
parties
are. Thus, in a case recently decided on appeal to the same Delaware

district court that decided the Rickel case,<a href="#25" name="25a">25</a> the court rejected the
non-debtor's arguments
that it had not received notice of a proposed lease assignment to a
competitor pursuant to a designation rights order.<a href="#26" name="26a">26</a> In addition to
raising due-process issues, the non-debtor tenant asserted that its
statutory right under §365(b)(3)(D) to preserve the tenant mix
and
balance in the affected shopping center had been abrogated. The
court
sidestepped the issue of a non-debtor tenant's rights in connection
with a shopping center lease assignment, so the issue remains
essentially
unresolved—thus offering fertile ground for subsequent
litigation,
particularly in the designation-rights context.

Ideally, parties (and courts) should assume that the
entire shopping center complex is affected by a proposed
assignment—particularly the assignment of an "anchor"
store—and that all non-debtor tenants should be notified.
Timely
notice is especially important to non-debtor tenants because, as a
practical matter, it may be difficult, if not impossible, to undo
the
assignment process after the fact.

The Trak Auto decision is likely to undercut, but not
eliminate, one of
the primary attractions of designation rights sales: the ability to
reject
restrictive provisions. Following Trak Auto, new tenants must
comply with use restrictions contained in
the leases unless they constitute de facto anti-assignment
clauses.

Nevertheless, the practice of selling designation
rights will continue to have appeal as long as leases can be
assigned at
below-market value. In Trak Auto, for example, the debtor
could have sold designation
rights in and to its leases provided that such sales were made
expressly
subject to all applicable provisions of §365(b)(3). Such a sale
would
have enabled the debtor to bridge the timing discrepancy created by
temporarily difficult market conditions, while deferring the issue
of
compliance with §365(b)(3) until an actual assignment was in
prospect.

<h4>Conclusion</h4>

To sum up:

<ul>
<li>In Trak Auto, the Fourth Circuit Court of Appeals has
ruled that use
clauses making assignments seemingly unviable due to market
conditions are
enforceable;

</li><li>Sen. Hatch's comments on the purpose of
the 1984 Amendments suggest that use clauses requiring operation
under a
specified trade name are probably unenforceable; and

</li><li>The Rickel opinion stands for the proposition that use
clauses
requiring assignment for non-existent uses to non-existent entities
constitute de facto anti-assignment clauses with which it is
impossible to comply,
and therefore, they are unenforceable. Had the Rickel court
upheld the de facto anti-assignment
clauses at issue, the landlords would have obtained not the benefit
of
their original bargain, but the inevitable reversion of the debtor's

leasehold interests to the landlords. In effect, such a holding
would
result in an assured windfall for the landlords, who could then
re-let the
properties for alternative uses at market rates. By contrast, the
debtor in
Trak Auto could
have held its properties for future assignment or, if the carrying
cost of
the properties were the principal issue, could have sold designation
rights
in the properties.

</li></ul>
In the second part of this article, we will explore
the statutory rights of non-debtor tenants to preserve the tenant
mix and
balance in their shopping centers based on a right grounded both in
the
plain language of §365(b)(3)(C) and (D) of the Code and in the
legislative history touched upon by the Fourth Circuit in Trak
Auto.

<hr>
<h3>Footnotes</h3>

<a name="1">1</a> Pamela
Smith Holleman and Magdalena Ellis are attorneys with Sullivan &

Worcester LLP, a corporate law firm with offices in Boston, New York
City
and Washington, D.C. The authors gratefully acknowledge the
encouragement
and support of Patrick P. Dinardo, a partner at the firm practicing
in this
area, as well as the insights of their colleague, Emily K. Cohen, in
the
development of this article. <a href="#1a">Return to article</a>

<a name="2">2</a> In re Federated
Dep't. Stores Inc., 135 B.R. 941, 943-46 (Bankr. S.D. Ohio 1991). <a href="#2a">Return to article</a>

<a name="3">3</a> In re Trak Auto
Corp., 367 F.3d 237 (4th Cir. 2004). <a href="#3a">Return to
article</a>

<a name="4">4</a> 11 U.S.C.
101 et seq. <a href="#4a">Return to article</a>

<a name="5">5</a> In the
present context, the terms "trustee" and
"debtor-in-possession (DIP)" may be used interchangeably. See

11 U.S.C.
§1107(a) (a DIP is accorded the rights of a trustee pursuant to
11
U.S.C. §1108). <a href="#5a">Return to article</a>

<a name="6">6</a> 11 U.S.C.
§365(f)(2)(B). <a href="#6a">Return to article</a>

<a name="7">7</a> 11 U.S.C.
§365(b)(3)(C). <a href="#7a">Return to article</a>

<a name="8">8</a> Id. <a href="#8a">Return to article</a>

<a name="9">9</a> 11 U.S.C.
§365(b)(3)(D). <a href="#9a">Return to article</a>

<a name="10">10</a> Section
1.1(L) of the lease limited "permitted uses" to the
"[s]ale at retail of automobile parts and accessories and such other

items as are customarily sold by tenant at its other Trak Auto
stores." In §8.1 of the lease, Trak Auto agreed to "use
the leased premises only as a Trak Auto store and for the uses
provided in
§1.1(L)." In re Trak Auto, 367 F.3d at 240. <a href="#10a">Return to article</a>

<a name="11">11</a> 240 B.R.
826, 831 (D. Del. 1998), appeal dismissed, 209 F.3d 291 (3d
Cir.), cert. denied sub nom., L.R.S.C. v. Rickel Home Ctrs. Inc.,

531 U.S. 873 (2000). <a href="#11a">Return to article</a>

<a name="12">12</a> In re LaSalle
Nat'l. Trust, 288 B.R. 114, 125 (E.D. Va. 2003), citing
In re Ames Dep't. Stores Inc., 121
B.R. 160, 165 (Bankr. S.D.N.Y. 1990). <a href="#12a">Return to
article</a>

<a name="13">13</a> In re Trak Auto
Corp., 367 F.3d 237, 243 (4th Cir. 2004), citing 11 U.S.C.
§365(b)(3) (1982) (emphasis added). <a href="#13a">Return to
article</a>

<a name="14">14</a> Id. <a href="#14a">Return to article</a>

<a name="15">15</a> In re Trak Auto
Corp., 367 F.3d at 245, citing 130 Cong. Rec. S8891 (daily
ed. June 29, 1984) reprinted in 1984 U.S.C.C.A.N. 590, 600. <a href="#15a">Return to article</a>

<a name="16">16</a> Id. <a href="#16a">Return to article</a>

<a name="17">17</a> This topic
will be explored in Part II of this article, which will appear in
the
February 2005 issue of the ABIJournal. <a href="#17a">Return
to article</a>

<a name="18">18</a> Full
disclosure: the authors' firm represented the entity acquiring
leases
in the Rickel case. <a href="#18a">Return to article</a>

<a name="19">19</a> In re Trak Auto
Corp., 367 F.3d at 245. <a href="#19a">Return to article</a>

<a name="20">20</a> In re Rickel
Home Ctrs., 240 B.R. at 831. <a href="#20a">Return to article</a>

<a name="21">21</a> Id. at 831.

<a href="#21a">Return to article</a>

<a name="22">22</a> Id. at 830.
<a href="#22a">Return to article</a>

<a name="23">23</a> Id. at 831.
<a href="#23a">Return to article</a>

<a name="24">24</a> Id. at 832.
<a href="#24a">Return to article</a>

<a name="25">25</a> The
authors' firm represented the non-debtor tenant. <a href="#25a">Return to article</a>

<a name="26">26</a> Staples Inc. v.
Montgomery Ward LLC (In re Montgomery Ward LLC), 307 B.R. 782 (D.
Del. 2004). <a href="#26a">Return to article</a>

Journal Authors

Magdalena Ellis

Pamela Smith Holleman

Journal Date

Wednesday, December 1, 2004 - 12:00

Bankruptcy Rule

2004