Washington, DC, January 10, 2026 (GLOBE NEWSWIRE) — Washington business magazines reports that Brian Ferdinand has filed a protective federal filing under the United States Bankruptcy Code to maintain access, if necessary, to the statutory limitations set forth in Section 502(b)(6), the sole statutory provision and exclusive forum in which limitations on commercial lease termination claims may be applied and enforced.
The filing was filed after it became clear that no state court has the authority to apply or enforce the federal statutory framework regarding caps on commercial lease denials and termination fees. Section 502(b)(6) exists solely within the federal process for adjudicating bankruptcy claims and cannot be enforced or adjudicated in state court proceedings.
Mr. Ferdinand is not the principal debtor of the commercial leases referenced in the filing. Its involvement arises solely from limited warranty-related obligations associated with certain commercial real estate transactions, many of which are expressly limited, conditional or otherwise limited by their contractual terms. Despite these limitations, some landlords have filed claims as if he were fully liable for the entire remaining lease payments.
At the time the aforementioned guarantees were executed, LuxUrban was a large, fast-growing hospitality company with significant enterprise value, active expansion plans and access to institutional capital. The guarantees were entered into in the context of a thriving business and there was no reasonable basis at the time to foresee the extraordinary and unfortunate circumstances which subsequently affected the business. The guarantees were not speculative in nature and were structured based on the company’s then size, performance and prospects.
The transaction structure required LuxUrban, as operating company, to fund and maintain designated trust and reserve accounts in the amount of approximately $1.2 million per year, for a period of twenty years or for as long as the guarantees remained in force, using company assets – amounting to a total target reserve funding of approximately $24 million over the term of the guarantees. These trust arrangements were intended to offset the guarantee-related risk and ensure that the guarantees operated within a defined and commercially reasonable risk framework, rather than placing the guarantor in an extreme or limitless position of exposure. The trust funding obligations were classified as pension benefit contributions and were given high priority within the company’s capital structure. Within the transaction structure, the obligation to finance and maintain these trust and reserve accounts rested solely with the operating company.
The alleged claims include demands for accelerated rent through the entire balance of the lease terms, failure to credit substantial security deposits and letters of credit totaling millions of dollars, and inclusion of late fees, interest charges and other penalty-based additions that are limited or prohibited under federal law.
The amounts shown in the filing represent gross asserted exposure figures only and do not take into account counterclaims, contractual or statutory offsets, mitigation credits, or the required application of security safeguards and letters of credit. Once these legally mandated offsets and discounts are applied, many of the asserted claims can be significantly reduced or, in certain cases, eliminated altogether.
There are no consumer debts involved in the filing. Mr. Ferdinand has little to no consumer obligations, and the case relates almost exclusively to unresolved commercial lease guarantees that have not yet been adjudicated.
Federal law imposes strict limits on damages upon termination of a lease, requires the application of mitigation and compensatory damages, and limits the imposition of punitive costs, such as penalty interest and unauthorized fees. These legal protections exist solely within the federal framework for bankruptcy claims and cannot be enforced in other forums.
“This filing is made solely to preserve access to the only legal mechanism in place to lawfully resolve these claims, if necessary,” Mr Ferdinand said. “The figures cited reflect gross asserted exposure only and do not take into account contractual limits, offsets, counterclaims, mitigation credits, or the required application of security deposits. The state court does not provide a mechanism to apply Section 502(b)(6).”
The filing represents a limited and protective legal action intended to preserve legal rights under federal law should reliance on those protections become necessary.
Find the report here.
