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Stroock recently advised Edward J. Minskoff Equities (EJME) on a retail lease with CycleBar, an operator of premier fitness studios with locations throughout the United States and Canada, at the prestigious 51 Astor Place in Manhattan, while simultaneously representing EJME in the bankruptcy proceedings of the previous tenant, Flywheel, to expedite the termination of Flywheel’s lease. A hybrid real estate and financial restructuring team, which was led by partner Trevor Adler and included special counsels Sherry Millman and Debra Sapp, orchestrated a unique deal structure that may mark the beginning of a new trend.

Stroock’s national Real Estate and Financial Restructuring Groups continue to guide clients through myriad challenges of the COVID-19 pandemic. As landlords look to severe ties with organizations that have unfortunately gone bankrupt amidst the pandemic, they are seeking creative ways to re-lease their vacant space to new businesses.

The recent CycleBar lease can serve as a model to follow in that it is one of the first instances of a commercial tenant in New York City declaring bankruptcy in the wake of COVID-19 pandemic, having its lease terminated by rejection in bankruptcy court, and having the space re-let to a new tenant in a coordinated deal. As more companies either restructure or seek bankruptcy protection due to pandemic-related closures, additional deals may leverage this successful formula.

In a recent interview with the New York Business Journal, Trevor discussed the story behind the deal, noting "To have a coordinated effort by a landlord and a new incoming tenant to work together to effectuate a rejection, and to speed up the rejection, of the existing tenant's lease in bankruptcy and to rapidly put in place a new lease for that space is a very interesting and unique development that I am hoping will pave the way to more active leasing deals, whether it's through bankruptcy or not."

During a time when its been difficult to see a bright side, Trevor stated that "The idea of a new tenant having hope and coming into a market that is kind of devoid of hope right now is a very nice thing to see."

Trevor and the team believe that this type of deal structure will become more common as the Covid-19 pandemic continues to affect retail tenants in the immediate future as they anticipate a string of pandemic-related bankruptcies affecting retail tenants.

Stroock’s national Real Estate Group is a one-stop shop, drawing on extensive experience in virtually every aspect of commercial, residential, industrial and mixed-use property to ensure our clients meet all of their investment and operations goals. Our leasing team has a reputation for handling highly complex commercial lease transactions across the country, and our top-ranked Financial Restructuring team has been one of the busiest in the nation amidst the COVID-19 pandemic.