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allowed for decision making, that a Chapter 11 debtor will prematurely assume a lease that it later determines to be burdensome.
The change to section 365(d)(4) limiting the debtor's time to assume or reject commercial leases has been criticized by many Chapter 11 practitioners and commentators as making it much harder to reorganize, particularly in the case of retail debtors which operate from a multitude of locations. The legislative change may deprive the debtor of sufficient time to determine whether its proposed business plan can succeed with the benefit of at least one full selling season completed. Consequently, unless the landlord agrees to waive the 210-day deadline, the debtor will be forced to make decisions without adequate information and as a result either reject valuable leases or assume burdensome leases prematurely, to the detriment of the reorganization process. Time will tell if this is fair criticism.
BAPCPA also amended section 365(f)(1) of the Code, which invalidates restrictions on assignments of executory contracts or unexpired leases to a third party. The amended provision makes clear that section 365(f) does not override the other provisions of section 365, which would include the specific limitations of assignment of shopping center leases in section 365(b)(3). Prior to the amendment, some courts modified the strict conditions relating to shopping center leases where enforcement of such strict use and other conditions would limit assignment. The amendment now makes clear that in order for a debtor to assign a shopping center lease, the debtor must comply with the use clauses found in such leases. By eliminating flexibility, the amendment will reduce the debtor's ability to monetize such leasehold interests.
