► In This Issue:

• No Such Thing as a Sure Route: The Metroplex Tackle They Never Saw Coming
• Seventh Circuit: Termination of Lease Constitutes “Transfer” under 11 U.S.C. §§ 547 and 548
• The Nature of Redemption: Claim, Asset or Both?

No Such Thing as a Sure Route: The Metroplex Tackle They Never Saw Coming

Jodi D. Cooke Stichter, Riedel, Blain & Postler P.A. Tampa, Fla.

The § 363 game may be changing again, at least with respect to the treatment of express easements in real property. A bankruptcy court in the Eastern District of New York called an audible earlier this year in In re Metroplex on the Atlantic LLC, allowing a chapter 11 debtor to compel an objecting easement-holder to accept a monetary payout on account of his interest in real property being sold free and clear of liens under a liquidating chapter 11 plan. Prior to the Metroplexdecision, express easements were considered virtually impossible to remove via a free-and-clear sale.

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Seventh Circuit: Termination of Lease Constitutes “Transfer” under 11 U.S.C. §§ 547 and 548

Christina M. Sanfelippo Shaw Fishman Glantz & Towbin LLC Chicago

David R. Doyle Shaw Fishman Glantz & Towbin LLC Chicago

Counsel for commercial landlords should be aware of the Seventh Circuit’s recent opinion in Great Lakes Quick Lube LP v. T.D. Investments I LLP (In re Great Lakes Quick Lube LP). The Seventh Circuit held that a pre-bankruptcy termination of a lease was a “transfer” to the landlord for purposes of the preferential and fraudulent transfer provisions of the Bankruptcy Code, 11 U.S.C. §§ 547 and 548. Accordingly, the unsecured creditors’ committee could recover the “value” of the leases from the landlord for the benefit of the bankruptcy estate.

The opinion creates significant potential liability for commercial landlords with distressed tenants. When negotiating the termination of a lease, a landlord should be careful to assess the whether the “transfer” fits within any of the defenses to §§ 547 and 548 of the Bankruptcy Code.

In Quick Lube, the debtor (Quick Lube) operated over 100 stores that provided “oil changes and other automotive maintenance services.” Quick Lube typically leased each store location under a long-term lease. Just 52 days before filing bankruptcy, Quick Lube negotiated a termination of two leases with T.D. Investments I LLP (the “landlord”), who was a creditor of Quick Lube.

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The Nature of Redemption: Claim, Asset or Both?

Peter J. Duhig Buchanan Ingersoll & Rooney PC Wilmington, Del.

There is a split among bankruptcy courts as to whether a debtor may modify his or her state law right of redemption through a chapter 13 plan after his or her real property is sold at a tax sale. Section 1322 of the Bankruptcy Code permits a debtor to modify the rights of secured claims through a plan under certain enumerated circumstances. The threshold question, however, is whether or not a debtor’s right of redemption can be characterized as a “claim” subject to § 1322. Two courts that recently addressed this issue have reached opposite conclusions.

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