The Bratton Team

Bankruptcy filings are a certainty at this point. We are more than six months into the pandemic, and businesses are continuing to lose revenue, leading to rent loss for landlords. However, there is still some debate among industry experts about the amount of bankruptcy filings that will hit the market. Some, like BH Properties and Sabal Capital are expecting waves of bankruptcies, but Uzzi Raanan, a partner at Danning Gill, says that there could be a surge or merely an uptick in bankruptcies.

“It is difficult to predict whether we will see a surge in bankruptcy filings, or merely an uptick,” Raanan tells “We are still in the midst of an unprecedented—at least in recent times—pandemic that shuttered or greatly impacted most businesses, significantly increased unemployment, reduced economic activities in multiple sectors, and disrupted operations of the judicial system.  The reasons we have not experienced a deluge of bankruptcies include a large infusion of funds from the federal government through the CARES Act to businesses and the unemployed, as well as various statutes and emergency orders at the federal and local levels that effectively suspended evictions/foreclosures throughout the country.”

Government support and aid is only one element. Landlords have also played a significant role in stabilizing the market and working with tenants through challenges and lost revenue during the pandemic. “Many landlords, both commercial and residential, have bent over backwards to work with tenants who allege hardship due to COVID-19,” says Raanan. “They have deferred, reduced, and even forgiven rents with the hope that things will be worked out when the pandemic ends.”

However, while the government and landlords have helped to bring stability to the market and stave off collapse, for many, this is only delaying the inevitable. “These government and private actions have essentially delayed the effects of COVID-19,” says Raanan. “Most of the rents/mortgages that went unpaid in 2020 and possibly 2021 will be due in the future, as most of these liabilities were merely deferred, not forgiven.”

At some point, landlords and tenants will have to decide how to handle the lost revenue, and for landlords, the lender will likely dictate this decision as well. “When the pandemic ends, likely sometime in 2021, landlords and tenants will have to decide how to handle rents deferred in 2020-2021,” says Raanan. “Many landlords will need the back-payments to help them pay their own deferred mortgages. However, many tenants will decide that the burden of repaying the deferred rents is too high considering their financial resources.  Many tenants will likely file for bankruptcy in 2021 and 2022 to shed unsecured debts, including to landlords.  Some landlords will be unable to pay back deferred debts to their own mortgagees, which could result in many landlords filing for bankruptcy.”

It could be some time before the market sees these expected bankruptcies. “Federal and state authorities, as well as mortgagees/investors, are aware that too many bankruptcies by tenants and landlords could devastate the US economy and specifically the real estate market,” says Raanan. “As such, federal and local authorities may extend current rent and foreclosure deferral programs, create financial assistance for renters and landlords, etc.  It is therefore difficult to predict whether a surge of bankruptcies by landlords and tenants is inevitable.”