Washington, DC, Jan. 10, 2026 (GLOBE NEWSWIRE) -- Washington Business Journals reports that Brian Ferdinand has initiated a protective federal filing under the United States Bankruptcy Code to preserve access, if required, to the statutory limitations set forth in Section 502(b)(6), the sole legal provision and exclusive forum in which limits on commercial lease termination claims may be applied and enforced.
The filing was made after it became clear that no state-court venue is authorized to apply or enforce the federal statutory framework governing caps on commercial lease rejection and termination damages. Section 502(b)(6) exists exclusively within the federal bankruptcy claims-allowance process and cannot be imposed or adjudicated in state court proceedings.
Mr. Ferdinand is not the primary obligor on the commercial leases referenced in the filing. His involvement arises solely from limited guaranty-related obligations connected to certain commercial real estate transactions, many of which are expressly capped, contingent, or otherwise restricted by their contractual terms. Despite these limitations, certain landlords have asserted claims as though he were fully liable for the entire remaining lease terms.
At the time the referenced guaranties were executed, LuxUrban was a large, rapidly growing hospitality company with substantial enterprise value, active expansion plans, and access to institutional capital. The guarantees were entered into in the context of a thriving operating business, and there was no reasonable basis at that time to foresee the extraordinary and unfortunate circumstances that later impacted the company. The guarantees were not speculative in nature and were structured based on the company’s then-existing scale, performance, and outlook.
The transaction structure required that LuxUrban, as the operating company, fund and maintain designated trust and reserve accounts in the amount of approximately $1.2 million annually, for a period of twenty years or for so long as the guarantees remained in effect, using company resources—representing an aggregate contemplated reserve funding of approximately $24 million over the life of the guarantees. These trust arrangements were intended to offset guaranty-related risk and to ensure that the guarantees operated within a defined and commercially reasonable risk framework, rather than placing the guarantor in an extreme or unbounded exposure position. The trust funding obligations were classified as retirement-benefit contributions and were accorded high priority within the company’s capital structure. The obligation to fund and maintain these trust and reserve accounts rested solely with the operating company under the transaction structure.
The asserted claims include demands for accelerated rent through the full balance of the lease terms, failure to credit substantial security deposits and letters of credit totaling millions of dollars, and the inclusion of late fees, interest charges, and other penalty-based additions that are restricted or prohibited under federal law.
The amounts reflected in the filing represent only gross asserted exposure figures and do not account for counterclaims, contractual or statutory setoffs, mitigation credits, or the required application of security deposits and letters of credit. Once these legally mandated offsets and reductions are applied, many of the asserted claims may be materially reduced or, in certain instances, eliminated in their entirety.
The filing does not involve consumer debt. Mr. Ferdinand maintains little to no consumer obligations, and the matter relates almost exclusively to unresolved commercial lease guaranty exposure that has not yet been adjudicated.
Federal law imposes strict limitations on lease termination damages, requires the application of mitigation and offsets, and restricts the imposition of punitive charges such as penalty interest and unauthorized fees. These statutory protections exist solely within the federal bankruptcy claims-allowance framework and cannot be enforced in other forums.
“This filing was undertaken solely to preserve access to the only statutory mechanism that exists to resolve these claims lawfully, if required,” Mr. Ferdinand stated. “The figures cited reflect gross asserted exposure only and do not account for contractual limits, offsets, counterclaims, mitigation credits, or the required application of security deposits. State court provides no mechanism to apply Section 502(b)(6).”
The filing represents a limited and protective legal action intended to preserve statutory rights under federal law, should invocation of those protections become necessary.
Please find the report here.
Mariana Brodsky CEO Washington Business Journals info (at) washingtonbusinessjournals.com
