New Bankruptcy Law

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 is effective on October 17, 2005. Evictions will no longer be stopped by the Tenant’s bankruptcy if the landlord obtained a judgment of possession against the tenant before he filed bankruptcy. In addition, the automatic stay can be lifted if a landlord certifies that he is seeking a termination of a rental agreement based on illegal drug use or endangering property 30 days prior, unless the debtor files a response and requests a hearing. Under the old law, a bankrupt corporation that had a commercial lease had 60 days to decide whether to assume or reject a lease after filing for bankruptcy. Extensions could be granted by a court for one year or even more. The new law lengthens the decision-making timeframe to 120 days, with the option to request a 90-day extension for cause. However, after 210 days, no additional extensions can be granted without the landlord’s consent. If the corporation doesn’t decide within the 210-day period, the lease will be automatically rejected.