MINNEAPOLIS — "When the Supreme Court takes a case, that's a significant signal that something needs to be rectified here," said Rachel Paulose, University of St. Thomas law professor.
This week the U.S. Supreme Court agreed they 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 a term of 100 years when Mall of America opened back in 1991. Sears closed its doors at the Mall of America back in 2019 after declaring bankruptcy in 2018.
"Mall of America isn't challenging the sale of assets, they are challenging the $10 lease. The response from Sears is that you can't separate the two: You can't separate the sale from the lease — that they go together — and Supreme Court, you don't have jurisdiction to hear this case, but you can't undo what the bankruptcy court has done here."
This case isn't just about what's happening here in the Twin Cities. The Supreme Court is looking at the potential impact on bankruptcy sales across the country.
"Part of the reason that the court likely granted a writ of certiorari in this case is because lower courts around the country are having a great deal of difficulty in untangling this problem. It's not surprising because the bankruptcy code is notoriously complex," said Paulose.
Speaking of untangling matters, this case could appear to have the opposite effect based on how our laws are currently on the books with bankruptcy.
"Congress wanted the bankruptcy code with division of assets to be final — to give people a reason to take over troubled assets, and Sears is saying, 'What we did is final, while Mall of America wants to undo it,'" said Paulose.
We don't know exactly when the Supreme Court will hear the case in their next session, which begins in October, but it is expected to happen sometime later this year.
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