Bankruptcy Court Lifts Stay to Let Owner Evict Assignee in Chapter 11

What Happened: An airport tenant assigned its lease to an assignee. In June 2020, the owner and tenant signed an agreement terminating the lease. In August, the assignee filed for Chapter 11 bankruptcy. The owner asked for permission to bring a lawsuit to evict the assignee since the underlying lease was no longer in effect when the bankruptcy petition was filed.

Ruling: The Illinois federal bankruptcy court agreed and lifted the automatic stay.

Reasoning: Even though the bankruptcy laws allow the debtor in possession to assume unexpired nonresidential leases, in this case the lease was expired. The termination agreement effectively ended the assignee’s possession rights. And since those rights weren’t part of the bankruptcy estate or relevant to the reorganization plan, the owner could go ahead and pursue its eviction case against the assignee.

• In re Pride Aircraft, Inc., 2020 Bankr. LEXIS 3098