Orrin Hatch: “I am pleased that S. 420, the bankruptcy legislation, cures some abuses in the Bankruptcy Code regarding executory and…”

“I am pleased that S. 420, the bankruptcy legislation, cures some abuses in the Bankruptcy Code regarding executory and unexpired leases. One provision, Section 404 of the bill, amends Section 365(d)(4) of the Bankruptcy Code. Presently, Section 365(d)(4) provides a retail debtor 60 days to decide whether to assume or reject its lease. A bankruptcy judge may extend this deadline for cause, and therein is the problem. Too many bankruptcy judges have allowed this exception essentially to eliminate any notion of a reasonable and firm deadline on a retail debtor's decision to assume or reject a lease. Bankruptcy judges have been extending this deadline for months and years, often to the date of confirmation of a plan. This situation is unfair. A shopping center operator is a compelled creditor. It has no choice but to continue to provide space and services to the debtor in bankruptcy. Yet, the current Code permits a retail debtor as much as years to decide what it will do with its lease. Coupled with the increased use of bankruptcy by retail chains, the Bankruptcy Code is tipped unfairly against the shopping center operator. Some stores curtail their operations or go dark, and still the lessor cannot regain control of its space. This legislation, like the conference report in the last two Congresses, ends this abuse. It imposes a firm, bright line deadline on a retail debtor's decision to assume or reject a lease, absent the lessor's consent.”