In re Maidman

Full title: IN RE MAIDMAN

Court: United States District Court, S.D. New York

Date published: Aug 22, 1979

No. 79 B 43 (S.D.N.Y. Aug. 22, 1979)

Opinion

No. 79 B 43

August 22, 1979

Real Property Arrangements — Pre-petition Lease — Access To Premises

LEWITTES, Bankruptcy Judge

A debtor was bound by a lease of one of its properties that was in existence at the time the debtor filed his petition for a real property arrangement. Until rejection or breach, the lease was valid. Thus, the lessee was entitled to access to, and possession of, the leased premises in accordance with the terms of the lease.

The debtor, as trustee under a land trust agreement, had various property interests in oceanfront hotel property. The largest of the debtor's creditors was a first mortgagee. The first mortgagee commenced a foreclosure action against the debtor in state court. The court appointed a receiver to take possession of the debtor's property and operate his business. With the state court's approval, the receiver leased one of the debtor's properties. Thereafter, the debtor filed his Chapter XII petition.

When the lessee was denied access to the premises it sought relief in bankruptcy court. In an earlier ruling, the bankruptcy court determined that the lessee had rights in the property and ordered the debtor not to deny possession to the lessee. This order was reversed by the district court in In re Maidman, CCH Bank. L. Rep. No. 406, ¶ 67,135. The district court held that the order purported to declare rights in the debtor's property without following the procedural requirements set forth in the Bankruptcy Rules.

In this action, pursuant to Bankruptcy Rules, the lessee seeks an order requiring the debtor to give it access to the premises covered by the leased. It was clear, noted the instant court, that the district court deemed the receiver's lease with the lessee to be valid. Thus, until the debtor is permitted to reject the lease or the state foreclosure court determines that the lessee has breached the lease, the lease is valid. Accordingly, the court held that the lessee was entitled to access to, and possession of, the leased premises in accordance with the terms of the lease. See Section 413(1) [§ 365] at ¶ 8629.