The office location may be a business’s most important asset. That is the case for many businesses. So a good lease needs special protection. The strategy is not to have the operating business directly hold the lease. If it directly holds the lease, the bankruptcy court can transfer the lease to a buyer. If you lose your lease, you lose your business. But there are several ways to protect a lease. One solution is to hold the lease through another entity and have the landlord consent to allow you to assign or sublet the lease and location to your operating company as a tenant-at-will. You would then continue to control the location if your business fails. For example, you might evict your failing business and sublet the space to a successor business that you’d own at the same location – under a new sublet agreement. Or the landlord can permit you to pledge or assign your lease as collateral security to a friendly mortgage holder. If your business fails, that friendly mortgage holder can then rent the space to your successor business or to any other business that you designate.
