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When either a landlord or tenant files for bankruptcy, there are two things that can happen to the lease. The landlord or tenant (actually, the trustee) can either: assume the lease, that is, allow the lease to continue in effect, or. reject the lease, which essentially terminates or cancels the lease.
United States[edit] A preference in U.S. federal bankruptcy law is a transfer of property by a debtor to its creditor, on account of a pre-existing debt, that is made while the debtor is insolvent and gives the creditor more than it would obtain in a liquidation of the debtor's assets in a bankruptcy proceeding.