A debtor-tenant has the right under bankruptcy law, under certain conditions, to "assume" a lease for its ongoing business, or to assume and assign the lease to someone else for the profit of the bankruptcy estate.
We will not discuss here the peculiar concerns of shopping center owners when a major store tenant flies for bankruptcy, and then seeks to assume and assign its lease to a less-desirable type of tenant.
The term excludes lease renewal options (and any other period for which the parties reasonably expect the lease to
be renewed) if 75% or more of the lease acquisition cost is attributable to the lease term remaining at the acquisition date.
You'll also want the lease to stipulate that your company has the right to "quietly enjoy" uninterrupted use of the equipment as long as you continue to pay the leasing fees and comply with the lease terms.
But if you want to retain the rights to the upgrade, you can structure the lease to reflect this without increasing the lessor's risk.
A landlord's most drastic, and often most effective remedy where a tenant is in default is to - following the procedures of the so-called "conditional limitation" clause - declare the lease to be terminated.
The basic concept of the conditional limitation clause is to permit landlord to (i) give notice to tenant of some default; and (ii) if tenant does not cure, declare the lease to be terminated.
Thus, a recharacterization from an operating lease to
a financing lease or vice versa would not be treated as a change in method of accounting.
Suppose you have a lease with a high class women's clothing retailer or an established commercial tenant, and that tenant wants to assign its lease to a coffee shop or to a lower quality tenant - can you stop it?
The Court ruled that because the landlord had consented to the amendment of the lease to incorporate the broader language, the use clause was no longer restrictive but rather only descriptive.
The usual landlord-prepared form of shopping center lease provides for automatic subordination of the lease to
the lien of any mortgage affecting the shopping center, whether the mortgage was executed prior or subsequent to the execution of the lease.