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Ask Terry L. Your Own Question
Terry L.
Terry L., Attorney
Category: Bankruptcy Law
Satisfied Customers: 2845
Experience:  Better Business Bureau. 18yrs bankruptcy experience. Chicago Bar Assoc. American Bankruptcy Institute member.
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Hello Terry, I have a client who leased a small part of his

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Hello Terry, I have a client who leased a small part of his residential rental property to a cell tower company on a fifty year lease for a one time lump sum payment. The property is in foreclosure and briefly protected by a ch 7 bk stay. The tower company neglected to obtain a SDN&A at the time of lease signing and has verbally offered 30k to my client to acquire it as they are fearful of losing the rights to their million dollar cell phone tower. My ? is what bargaining power do I have to force them to come to the table and execute their tender offer? Thanks, Pat
Submitted: 6 years ago.
Category: Bankruptcy Law
Expert:  Terry L. replied 6 years ago.

Terry L. :

Hi and thank you for your question. In the future, you can request me to answer any further questions.

Terry L. :

I will need some additional info. Who filed bankruptcy?

Expert:  Terry L. replied 6 years ago.
What is the status of the chapter 7?
Customer: replied 6 years ago.
Terry, I efiled the 7 for the client (he teaches Taekwondo to my 3 little boys) on 11-17-10. 341 set for 12-30-10 central dist ca. As of this date no motion for relief from stay has been filed.
Expert:  Terry L. replied 6 years ago.
While the case is pending, the debtor would need court permission to obtain assets, and I would believe that would extend to the license. Is the debtor interested in keeping the property? if so, the chapter 13 would be needed to stop the foreclosure and cure the arrears. The debtor cannot force them to move on the offer unless it was accepted, because of the verbal nature at this point and the statute of frauds. They may be willing to do so to protect their interests. Why wouldn't the tower company do it directly with the licensing company? If the debtor rejected the contract and scheduled the tower on schedule F, the lease can be rejected and discharged in the case. Since the debtor has no foreseeable income, the 13 would be nearly impossible to get confirmed. As for strategy, I would suggest to the tower's attorneys, that they should complete the offer, so the debtor can cure the arrears on the property, and the debtor would sign a new contract with them post-bankruptcy if they do, so that they would be protected down the line. I would fear that this might not be in the debtor's best interest though, if he has no income to pay the mortgage in the future, and would open himself up to breach of contract claims with the tower company if he falls behind with the mortgage and it forecloses later if he re-signs a new contract. I would suggest laying out various options for the debtor, and advise him/her of the pro's and con's of each. If the debtor is truly looking for a fresh start, he shouldn't be concerned with the tower company's issues for failure to obtain the proper licensing,and look out for #1 first. Hope that helps. Thanks. let me know if you have any other questions.
Customer: replied 6 years ago.
Thank you for continuing with this. As for new assets: we have room in CA 703 code of exemptions to cover the remainder of the 30k after the arrears are cured through amendment-in the event the lessee tower co. funds their offer, or the bk could also be withdrawn, n'est ce pas?

Do we have leverage with the option of amending the ch7 petition to reject the extant lease even though it is prepaid for 50 years?

We are seeking the lessee tower co. to make good on their verbal offer so the arrearage is cured, to render moot the conversion to ch13 (assuming the debtor augments income), to keep the lease secure and to retain the property where the debtor's Martial Arts school is housed, as well as a small house he rents to foreign (Korean) Taekwondo students. The debtor anticipates no problem maintaining the mortgage once the delinquency is brought current. What say ye?
Expert:  Terry L. replied 6 years ago.
You can always amend to reject lease and list as a creditor. Then it would be up to the tower co to object based on sec. 11 USC 523, probably a(2) if any, if one would fit. it would just be a breach of contract then. The amendment of exemptions shouldn't be an issue, since it would require specific performance by the debtor, including costs for the license etc. If the exemption has enough to cover the $30k then it should be fine. note, you would need to exempt the mortgage cure amount too, since it would go to the debtor first,then to the mortgage. Hope it all works out for them.
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Customer: replied 6 years ago.
Terry did you receive my $25. bonus?
Expert:  Terry L. replied 6 years ago.
I did. thank you, XXXXX XXXXX Happy holidays.
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