Your heart probably sank when you got the notice that one of your commercial tenants had just filed for bankruptcy protection. After all, the health of their business directly impacts that health of yours.
So what happens now?
1. First, read the notice you received carefully.
Unless the tenant is already behind on their rent, this may be the first you've learned that something is amiss. The "Notice to Creditors" you receive will give you the case number and all the information you need -- including the date of the creditor's meeting in court. That will be your main opportunity to address the bankruptcy trustee and present your case.
2. Understand that an automatic stay is in place.
You cannot pursue any collection actions against your tenant until the automatic stay imposed by the bankruptcy court has been lifted. If you were thinking of sending a notice regarding back rent or starting eviction proceedings, you need to hold off for the time being. Otherwise, you can end up being held in contempt of court -- and the bankruptcy trustee will not be sympathetic to you.
3. Consult with a creditor's rights attorney.
You are not entirely helpless in this situation. There are many legitimate approaches you can take when a tenant files for bankruptcy to keep your business (and your bank account) from being unduly impacted. However, this is not a situation you want to try to handle on your own.
In these uncertain economic times, many small businesses are struggling to keep pace. Storefront businesses are having trouble competing against online stores. Therefore, commercial property owners may be seeing more bankruptcy notices than ever before. Be smart, be responsible and learn everything you can about your rights.