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What disclosure needs to be given to potential tenants when a property is part of a Chapter 11 bankruptcy?

Phoenix, AZ |

The properties do not have a trustee sale date however we are behind on the payments. We are almost at 'confirmation' (the end I think) and we just signed a 1 year lease with a new tenant. In the lease agreement we did disclose that the property was part of a BK11 however I'm not sure if we needed to add anything else? I asked our attorney but he never got back to us - he doesn't seem to like to answer these types of questions unless we corner him in his office. I have a real estate license so I asked my broker and was referred back to my attorney. Any advise please?

Attorney Answers 3

  1. Best answer

    There are so many moving parts to this situation that only YOUR bankruptcy attorney can give you a complete and valid answer. "An almost confirmed" plan is meaningless. If you are not happy with your current attorney, fire them and get another one. That is how you solve the problem of them "not liking" to answer your questions.

    Disclaimer: This answer is provided as a courtesy to the specific person asking the question and for informational purposes only. While believed to be accurate, facts and circumstances of the situation that you did not disclose can and does significantly alter the better answer. Some presumptions were made in answering the question. Specific facts that are contrary to those presumptions make this advice and answer of not value. I am not your attorney until I expressly agree to do so. No attorney-client relationship is intended to be formed by the conversations on this site.

  2. First of all, you better mention this stuff about not answering questions to the judge when it comes time for your fees to be approved. I would also make a record of all these bad acts because that sort of behavior really makes me mad. On the other hand, if you can successfully have your case confirmed, that's better than most attorneys.

    With that aside, I don't know AZ law, if AZ law makes you disclose this information, then you need to do it. Bankruptcy law does not make you disclose that information.

    I am not trying to second guess your attorney (because they know the facts better than we do) so I will try not to contradict him, but in general, I obtain court approval for any leases that may not be in the ordinary course of business (and even then, depending on the way my creditors have been behaving, I may get court approval anyway).

    This is how i really wanted to answer:
    1st. What in the world are you doing with an attorney that rarely responds to you unless you corner him? Are you paying him $10 per hour!?
    2nd. What in the world are you talking about? Trustee sale? In a Chapter 11, YOU'RE THE TRUSTEE (as the debtor in possession or DIP). If you're not the trustee, what the hell are you doing leasing estate property? That's the trustee's job!!

    So that makes me worry.

    Be sure to designate "best answer." If you live in S. California, you may call my firm for a consultation 818-507-6000. The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also terms and conditions item 9, incorporated as if it was reprinted here. Please visit my web site: for more information about my services.

  3. Your disclosure regarding chapter 11 and advising new tenants that this property is part of chapter 11 reorganization plan should be sufficient.

    Madhu Kalra Kalra Law Firm 23720 Arlington Avenue, Ste 5 Torrance, Ca 90501 (310) 325-9012

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