U.S. Supreme Court to review validity of Mall Of America lease

The U.S. Supreme Court has agreed to hear a Mall of America case, challenging Sears Holding Corporation on the merits of its original 1991 lease.

MINNEAPOLIS — “When the Supreme Court takes a case, it’s a significant signal that something needs to be rectified here,” said Rachel Paulose, a law professor at the University of St. Thomas.

This week, the United States Supreme Court agreed that it would hear a case with the Mall of America challenging Sears Holding Corporation on the merits of their original lease. It was set at $10 per year for 100 years when Mall of America opened in 1991. Sears closed Mall of America in 2019 after filing for bankruptcy in 2018.

“Mall of America is not challenging the asset sale, they are challenging the $10 lease. Sears response is that you can’t separate the two: you can’t separate the sale from the lease – they go together — and the Supreme Court, you don’t have jurisdiction to hear this case, but you can’t undo what the bankruptcy court did here.”

This case is not just about what is happening here in the Twin Cities. The Supreme Court is considering the potential impact on sales of bankruptcies across the country.

“Part of the reason the court likely granted a writ of certiorari in this case is that lower courts across the country have a very difficult time sorting out this issue. This is not surprising as the bankruptcy code is notoriously complex,” Paulose said. .

Speaking of sorting things out, this case might seem to have the opposite effect depending on how our laws currently stand with bankruptcy.

“Congress wanted the Asset Split Bankruptcy Code to be final – to give people a reason to take over troubled assets, and Sears says, ‘What we did is final, while Mall of America wants the undo,'” Paulose said.

We don’t know exactly when the Supreme Court will hear the case in its next session, which begins in October, but it should happen later this year.

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