Commencement of a Chapter 11 Case to Obtain Extension of a Real Estate Closing Date May Not Constitute a Bad Faith Filing
By: Michael L. Moskowitz and Melissa A. Guseynov
In a recent memorandum decision, dated November 12, 2019, a New York Bankruptcy Judge held that filing a chapter 11 petition in order to obtain a 60-day extension of a closing date does not constitute bad faith. In re AAGS Holdings LLC, 19-13029 (Bankr. S.D.N.Y. Nov. 12, 2019). Read the full opinion here.
In AAGS Holdings, a limited liability corporation was under contract to buy certain real property. The contract of sale specifically stated that time was “of the essence.” In addition, if the closing did not take place by the date set forth in the contract, the seller could elect to terminate the contract and retain purchaser’s deposit.
