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Lease Restructuring

As a result of the COVID-19 crisis, both landlords and tenants are struggling to deal with the myriad issues arising under their leases, not least the uncertainty surrounding how businesses will use space following the crisis. Shipman’s cross-disciplinary team addresses all forms of leasehold obligations, including rent reduction, lease renewal, assignment/sublease, premises contraction and expansion, and lease termination. Our practice spans multiple asset classes, including retail, office, industrial, medical facilities, hotel, technology parks, and commercial airports, among others. Our team’s knowledge draws from lawyers across the firm, with practitioners from our real estate, litigation, restructuring, employment, insurance and tax practices working together to provide companies with sound business-focused legal advice.

In addition, the team handles restructuring matters ranging from those bankruptcies and workouts occurring in the regular course of business, to renegotiation in the event of distress. The recent pandemic has brought awareness globally to the reality that a changing economy often has a sudden and unpredictable impact on businesses and business relationships. Planning and quick, reasoned reactions are critical to helping businesses navigate the challenges.  Well before a default occurs or a bankruptcy case is filed, we counsel our clients to minimize risk and improve their positions in the event of a financial downturn.  When a financially distressed situation occurs, we help guide our clients to minimize risk, maximize value, and capitalize on opportunities. This includes guiding them through workouts and restructurings, negotiating and drafting forbearance agreements and loan modifications, and advising on insurance and surety coverage, as well as numerous other creditors’ rights issues.

Some of our experience in the area of lease restructuring includes:

  • During the current retail recession, we fully leased the retail portion of a premiere NY City building to Old Navy and JPMorgan Chase. The JPMorgan lease was listed in the top-10 Manhattan lease deals in The Real Deal. The development itself will be a city landmark and offers over 230,000 sq. ft. of space, including luxury residences and premium retail.
  • Represented landlords in connection with retail leases in which we addressed COVID closures relating to economic issues, failed co-tenancies, and governmental regulatory /force majeure issues
  • Represented a tenant whose office and retail sites were negatively impacted, and they were seeking relief based upon mandatory governmental shutdowns and other economic impairments
  • Worked on an office lease restructuring for a Fortune 500 public company in order to realize cost savings as revenues for the company declined.
  • Represented major New York City developer in connection with workout and restructure of large midtown development site.
  • Representing numerous landlords with office tenants that required downsizing and optionality to address financial concerns
  • Represented landlords of major retail tenants who are selling their leaseholds through a bankruptcy, which included pre- and post-commencement obligations and related development concerns
  • Worked on lease restructuring for our client who owns and operates a number of athletic fields on which they run clinics for children and other athletes in the Mid-Atlantic.   All of their leases needed to be renegotiated to avoid bankruptcy or the termination of their businesses.

To learn more about considerations related to leasing in the wake of the COVID-19 crisis, and analysis of related issues, please visit Shipman & Goodwin’s Real Estate Leasing Resource Page dedicated to providing resource information to landlords and tenants in Connecticut and New York, to help address lease issues, offering functional and pragmatic solutions during these uncertain times.

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