Bankrupt Tenant Can Have More Time to Decide if It Will Assume Lease

A beauty supply store tenant filed for bankruptcy in an effort to reorganize its business. The tenant continued to pay its rent and asked the court for additional time to decide if it would assume or reject its lease with the center. The owner objected because another beauty supply retailer was interested in leasing the tenant's space. The owner was afraid that delaying the tenant's decision on its lease would cause the owner to lose the beauty supply retailer as a replacement tenant. And because the tenant had an exclusive, the owner couldn't lease a different space to the beauty supply retailer.

The federal bankruptcy court in Oklahoma ruled that the tenant could have more time to decide if it would assume its lease. The court said that to get more time, the tenant merely had to make its request within 60 days of filing for bankruptcy, which this tenant did. The court noted that the tenant had to evaluate 33 leases, so more time wasn't unreasonable. It also noted that both parties were getting “the benefit of their bargain”: The owner was getting its monthly rent and the tenant was getting the benefit of its exclusive [In Re: Beautyco, Inc.].