What happens if a Deka Lash tenant voluntarily institutes insolvency or bankruptcy proceedings?
Deka_Lash Franchise · 2024 FDDAnswer from 2024 FDD Document
NOW, THEREFORE, for and in consideration of the execution of the Lease by Landlord and Tenant and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties agree as follows:
- I. Tenant assigns all of its right, title and interest in and to the Lease and the Premises to Franchisor, effective automatically without further action of Tenant upon notice from Franchisor to Landlord. Although it is the intention of the parties that this Agreement may be effective as a present assignment, it is expressly understood and agreed that until an event described below has occurred and Franchisor has exercised its remedies, Landlord shall look to Tenant for full performance of Tenant's obligations under the Lease. In no event shall Franchisor have any liability, duty, or obligation to Landlord under the Lease or otherwise without Franchisor's written consent in its sole discretion.
- II. With the exception of Sections III, IV, VIII, IX below which are effective as of the date this Agreement is fully executed by the parties, the assignment of Lease contemplated hereunder is conditional and shall not be effective until the "Effective Date," as defined in Section 5 of this Agreement. Franchisor shall have no right to assume the Lease unless and until:
- a. Default by Tenant under the terms of the Lease, which default is not cured by Tenant within the time limits provided therein; or
- b. Default by Tenant under the terms of the Franchise Agreement which default is not cured by Tenant within the time limits provided therein; or
- c. Voluntary institution of any insolvency or bankruptcy proceedings as a debtor or insolvent on the part of Tenant or involuntary insolvency or bankruptcy proceedings brought against Tenant which are not dismissed within 60 days of the filing thereof;
- d. Discontinuation by the Tenant of operation of a Deka Lash operation in the Premises, whether voluntarily or involuntarily; or
- e. Nonrenewal by Tenant of the Franchise Agreement
Source: Item 23 — RECEIPT (FDD pages 63–234)
What This Means (2024 FDD)
According to Deka Lash's 2024 Franchise Disclosure Document, if a Deka Lash tenant voluntarily institutes any insolvency or bankruptcy proceedings, the tenant assigns all rights, titles, and interests in the lease and premises to Deka Lash. This assignment becomes effective automatically upon notice from Deka Lash to the landlord, without requiring any further action from the tenant.
However, until Deka Lash exercises its remedies, the landlord will continue to look to the tenant for full performance of the tenant's obligations under the lease. Deka Lash will not have any liability, duty, or obligation to the landlord under the lease unless Deka Lash provides written consent in its sole discretion.
This assignment of lease is conditional and only becomes effective under specific circumstances, including the voluntary institution of any insolvency or bankruptcy proceedings by the tenant. Other conditions that trigger the assignment include default by the tenant under the lease or franchise agreement, discontinuation of the Deka Lash operation at the premises, or nonrenewal of the Franchise Agreement.