In re Spanish Peaks Holdings II, LLC

A bankruptcy trustee may sell the bankrupt estate’s real property free and clear of unexpired leases, so the lessees’ interest and right to possession is ended by the sale free and clear.  A bankruptcy trustee may sell the bankrupt estate’s real property free and clear of unexpired leases under 11 USC 363(f).  This section does not conflict with 11 USC 365(f) which allows the trustee to reject unexpired leases, but allows the lessee to remain in possession under those circumstances.  If the trustee simply sells the property free and clear, the leases are not rejected, so section 365 simply does not apply.  The lessees’ interest and right to possession is ended by the sale free and clear.

Ninth Circuit Court of Appeals (Block, J., sitting by designation); July 13, 2017; 2017 WL 2979660

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