We are looking forward to providing the community with new content and resources in 2021. The committee is always looking for contributions to the newsletter, suggestions for presentation topics and help producing webinar content. If you are interested in contributing, please reach out to any of the committee leaders. Their contact information can be found on the Business Reorganization Committee’s web page.

Throughout the year, we have seen the affected parties modifying lease terms, reducing rental fees, entering into forbearance agreements and deferments, extending maturity dates, allowing rent-forgiveness for the governmental shutdown period or simply terminating leases in their efforts to avoid bankruptcy or total insolvency. Some landlord/tenant parties have opted to apply all or part of the security deposit or the letter of credit to the unpaid rent as reasonable consideration for termination. Other tenants, not able to continue with their present economic struggles, have opted instead to reorganize in bankruptcy.

Traditional Valuation Approaches and the Bankruptcy Code
The two tried-and-true, traditional methods of business valuation — “the income approach” and “the market approach” — are regularly utilized and recognized in bankruptcy courts. With many businesses experiencing no or diminished cash flow and the future of the economy uncertain, the traditional valuation approaches become less reliable and meaningful.

The debtor asserts that the CBA was historically onerous but had also resulted in a significant obligation for severance (approximately $3.5 million) based on an industry-wide arbitration decision. Accordingly, potential modification of the CBA under § 1113 of the Bankruptcy Code was one of the objectives of the bankruptcy. This same issue is likely to present itself in other similar hotel industry bankruptcies. As such, a review of § 1113 is merited.