Bankruptcy

In the high-stakes world of New York commercial real estate, the “Good Guy Guaranty” is often viewed as a tenant’s ultimate safety net. However, a recent decision by the New York Supreme Court, 387 Park S. L.L.C. v. Schulman (Feb 11, 2026), serves as a critical reminder that even the strongest guarantees can be limited by bankruptcy proceedings and the specific mechanics of a “vacate date.”

Landlords need to ensure their protections are ironclad and tenants need to understand the limitations of these provisions.

The Case at a Glance

The landlord (387 Park S. L.L.C.) sought over $8.8 million in unpaid rent and damages from two individual guarantors after the tenant, a restaurant group, defaulted on a lease with annual rent exceeding $2 million.

The landlord argued that because the tenant failed to provide a required 120-day notice of its intention to vacate, the guarantors should be on the hook for the remainder of the lease term. The court, however, ruled that liability was limited only to the date the premises were actually surrendered—largely because a bankruptcy judge had terminated the lease by operation of law.

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Key Takeaways for Landlords and Property Managers

1. Bankruptcy Can “Clip” Your Guaranty

One of the most significant aspects of this ruling is the court’s deference to the bankruptcy stay and subsequent lease termination. Even though the “Good Guy” requirements (like the 120-day notice) weren’t met, the court held that the landlord could not recover for the entire lease term against the guarantors once the bankruptcy judge terminated the lease.

• Management Tip: When a tenant enters bankruptcy, don’t assume your guaranty covers the full term of the lease. You must move quickly within the bankruptcy proceedings to establish the “Vacate Date” as early as possible to quantify your claim.

2. The “Defenses Waived” Clause is Your Best Friend

The landlord won on the issue of liability because the guaranty included a clause stating the defendants “waive all defenses other than payment in full.” This prevented the guarantors from blaming the landlord for construction delays or delivery issues to avoid paying.

• Management Tip: Guaranties should be reviewed to see if they contain a broad waiver of defenses. As seen in this case, it allows the court to grant summary judgment on liability quickly, moving the fight straight to the “how much” phase rather than “if” they owe.

3. Signature Verification Still Matters

One defendant tried to claim her signature on a lease amendment was a forgery. While the court dismissed this (noting she had verified the signature in a previous lawsuit), it highlights a common delay tactic.

• Management Tip: For high-value commercial leases, notarized signatures can turn a “forgery” defense from a potential headache into a non-starter.

4. The “Vacate Date” Ambiguity Trap

The court ordered a trial specifically to determine the exact date the tenant left (the “Vacate Date”). The parties were arguing over a window of just a few days/weeks, but at $2 million a year, every day matters.

• Management Tip: When a tenant vacates—especially under a court order or bankruptcy—management should document the surrender immediately. Take photos, change the locks, and issue a formal “Notice of Re-entry” to cement the vacate date in the record.

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How Experience Real Estate Counsel Can Protect Your Portfolio

The Schulman case proves that even with a multi-million dollar lease, a landlord’s recovery can be limited by the intersection of bankruptcy law and the specific language of a guaranty. To protect yourself, your management team must be disciplined in its documentation and aggressive in its legal positioning.

Here’s the case if your interested in an all the details ()