Tenant Couldn't Assume Lease that Terminated Before Its Bankruptcy Filing

May 31, 2002

An owner sued to evict a tenant that failed to pay rent. A court ordered the tenant to pay the rent due and entered a “Judgment for Possession—that is, a court judgment giving the owner possession of the space. Five days later, the tenant filed for bankruptcy. Two months after that, the tenant asked the bankruptcy court to extend the amount of time it had to assume or reject its lease. The owner argued that the tenant couldn't assume the lease because the lease ended when the court entered the Judgment of Possession.

An owner sued to evict a tenant that failed to pay rent. A court ordered the tenant to pay the rent due and entered a “Judgment for Possession—that is, a court judgment giving the owner possession of the space. Five days later, the tenant filed for bankruptcy. Two months after that, the tenant asked the bankruptcy court to extend the amount of time it had to assume or reject its lease. The owner argued that the tenant couldn't assume the lease because the lease ended when the court entered the Judgment of Possession. The tenant argued that the lease didn't end until a “warrant of removal” was issued—that is, a warrant ordering the tenant to move out of the space.

A New Jersey bankruptcy court agreed with the owner. It said that under New Jersey law, a lease ends when a court enters a Judgment of Possession. In response to the tenant's argument that the lease didn't end until a “warrant of removal” was issued, the court said that a warrant of removal is a way to enforce a Judgment of Possession, not end a lease [In re Great Feeling Spas, Inc.].

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