The COVID-19 pandemic has been, for better or worse, a transformative time for businesses undergoing disruption to everyday operations. As trends in office space and locations shift on a large scale, tenants are seeking ways to circumvent existing leases. The demand for rent concessions grows as tenants consider their options in the face of losses and even bankruptcy. Tenant distress puts a strain on landlords. Whether strict in their terms or accommodating of tenants’ needs, landlords should be well-versed in their protections under the law. Meanwhile, shortfalls in rent payments and obstacles with reopening guidelines pose landlords with struggles of their own. What can landlords and tenants alike do in the face of these obstacles as the pandemic and economic downturn continue? What trends and innovations can be adopted to help businesses succeed in the face of distress? What is predicted to come next? Join William Kinney, member of Withum’s Real Estate Services Team; Donald Clarke, Bankruptcy and Restructuring Attorney at Wasserman, Jurista & Stolz; and Ken DeGraw, leader of Withum’s Financial Distress and Recovery Services Team, for this multifaceted discussion.

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Landlords & Tenants –
Managing Through Distress
William Kinney, CPA
Real Estate Services Group, Withum
Donald Clarke
Bankruptcy and Restructuring, Wasserman, Jurista & Stolz
Ken DeGraw, CPA CFF CFE CFP
Financial Distress and Recovery Services, Withum

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• Webinar is being recorded
• 45 minute sessions
• 15 minutes Q&A (or however long it takes) session at the end
• Send in your questions!
• Type in the Questions Pane of the GoToWebinar Panel
• Slides and recording will be emailed after the webinar
Housekeeping

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William B. Kinney III, CPA
Real Estate Services Group Team Member, Withum
William Kinney has more than 17 years of experience in public
accounting and specializes in providing audit and assurance services to
numerous industries, including real estate, construction, manufacturing,
distribution and logistics. His expertise includes working across the
spectrum of real estate asset classes and entity structures, from single
property LLCs to multi-billion dollar REITs.
William is a licensed Certified Public Accountant in the state of Maryland.
He obtained a Bachelor of Business Administration with a major in
accounting from Georgia State University.

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Donald W. Clarke
Attorney, Bankruptcy and Restructuring, Wasserman, Jurista & Stolz
Since joining Wasserman, Jurista & Stolz in 2008, Don has quickly
gained substantive experience in a wide range of complex commercial
matters concerning bankruptcy, restructuring and state court insolvency.
Don represents debtors and trustees overseeing the reorganization,
liquidation and administration of bankruptcy estates, and helps creditors
enforce their rights and maximize their recovery. Don’s experience
includes representation of several entities with hundreds of millions of
dollars in real estate holdings in New York and New Jersey in several
high-profile bankruptcy cases.
Prior to joining the firm, Don graduated from Loyola University Maryland
with a Bachelor of Business Administration where he majored in
Management Information Systems. After several years as a network
administrator and computer programmer, Don went to law school and
graduated from the University of Miami School of Law, cum laude, with
his Juris Doctorate, in May of 2008.

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Kenneth J. DeGraw
Partner, Lead, Financial Distress and Recovery Services, Withum
Ken DeGraw is a tax partner based out of Withum’s Whippany, NJ office.
With more than 30 years of experience, Ken’s expertise in public
accounting includes working with business entities and their related
ownership to address and resolve financially challenging situations.
As a leader in the Firm’s Forensic and Valuation Services group, Ken
provides services in the areas of insolvency, receivership, bankruptcy,
and forensic accounting amongst others. Ken also provides tax
compliance and controversy services to individuals and businesses within
the financial services, real estate and professional services industries.

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What We’ll Cover
Landlord & Tenant Outlook
• Proactive Steps
• Tenant Bankruptcy
• Landlord Bankruptcy
• Assumption or Rejection
Bankruptcy
Practical Application of Law

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Tenant & Landlord Outlook

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Tenants: Keeping the lights on
Amenities,
Revisited
The Office,
Redefined
Space v.
Distance

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Landlords: A Look Forward
Amenities,
Revisited
The Office,
Redefined
Space v.
Distance

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Pro-Active Steps

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Pro-Active Steps
Review the lease
Non-financial information
Security Deposits LOC or Cash
Guarantors
Proactive engagement
Above or below market lease?
Declare a default / Request modification

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Bankruptcy of a Tenant

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Bankruptcy
Automatic stay
Get informed
Confirm debtor and lessee are the same
Default before the Bankruptcy
Must remain current post petition
Cannot offset Cash Security Deposits
Ipso facto clauses are not enforceable
File a proof of claim

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Bankruptcy Claim
Prepetition
Rent -
Unsecured
Claim
Postpetition
Prerejection -
Administrative
Claim
Rejected
Lease -
Unsecured
Claim
Abandoned
Property - Part
of Rejection
Claim

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Landlord Bankruptcy

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Landlord Bankruptcy: Tenant Issues
Automatic stay
Get informed
Obligation to pay rent unchanged
Security deposit is NOT property of the estate
LL can Assume or Reject
Rejection: move out (LL breach) or stay (LL not req to perform)
Lease can be assigned to a new owner
PP damages if any cannot be offset

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Assumption or Rejection

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Assume or Reject
120 Days + 90 day extension
• Assumed rejected
Assume
• Cure default
• Compensate LL for actual losses
• Adequate assurance of future performance
• Assignment / Shopping Center Protections
Reject
• Vacate
• Unsecured rejection claim (capped)
• Greater of one years rent or 15% of (max) 3 years rent under the lease

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Protection for Assignment
Restrictive
use clause
maintained
Tenant mix
and balance
maintained
Percentage
rent
maintained
All lease
terms
maintained

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Practical Application of Law

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Practical Application of Law
Current Case Trends
• Contingent assumption, leaving parties to address cure
issues.
• Force Majeure
• Recent attempts to assert Force Majeure - Pillsbury Law
• Material Adverse Change
• Common Law (Frustration, Impossibility/Impracticability)
• Tolling of obligations in Bankruptcy - Gibbons Law

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Questions?
Contact Our Presenters
William Kinney – wkinney@Withum.com
Don Clarke – DClarke@wjslaw.com
Ken DeGraw – kdegraw@withum.com