%1

The chairs of the Real Estate Committee thank all the committee members for their support during this past year. COVID has had quite an impact on real estate lending and real estate bankruptcies. A major (and obvious) theme was the force majeure provision in contracts, and whether the COVID pandemic triggers the clause to, inter alia, excuse rental payments. Many governors’ emergency orders affected real estate as well, from construction permit tolling to foreclosure and eviction moratoriums.

In a June 3, 2020, decision,[1] the U.S. Bankruptcy Court for the Northern District of Illinois held that a force majeure provision partially excused a restaurant’s obligation to make post-petition rental payments after the Governor of Illinois, J.B.

On May 15th, JCPenney announced that the company was filing for chapter 11 relief. Another in a trend of major retailers filing for bankruptcy. JCPenney’s announcement was expected, as forced closures in the pandemic exacerbated the company’s pre-COVID financial problems.[1] However, what raised some eyebrows is the company’s plan to spin its properties into a real estate investment trust (REIT) as a part of its proposal to emerge from bankruptcy.

In a matter of first impression,[1] the U.S. District Court for the Southern District of New York vacated and remanded a bankruptcy court order that had overruled objections and allowed the assumption and assignment of Sears’s lease with Mall of America.[2] The district court found that the assignee failed to give Mall of America “adequate assurance of future performance” of the lease under 11 U.S.C.