What happens to leased chips if the data centre landlord goes bankrupt or the tenant defaults?
If the data centre landlord goes bankrupt and rejects the lease, the lessee must elect to stay in occupation under section 365(h) of the Bankruptcy Code; electing to treat the lease as terminated without Broadcom’s consent is void. If the tenant defaults where credit support is in place, the lessee must preserve the data centre lease and transfer it to Google, or to the alternative credit support provider, including by assuming and assigning it in a bankruptcy. Oracle is named as a possible alternative provider. The point for a data centre developer: the chips’ financiers want the site lease to survive any failure, and will expect the landlord’s lease to allow that transfer.
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What the filed contracts say
Contract
What the filed wording says
Broadcom TPU lease to Anthropic
If a bankrupt landlord rejects the data centre lease, the lessee must elect to retain its rights under section 365(h).
Broadcom TPU lease to Anthropic
An election to treat the lease as terminated without the lessor’s consent is void.
Broadcom TPU lease to Anthropic
On a tenant default with credit support in place, the lessee must preserve the data centre lease and transfer it to Google or the alternative credit support provider.
Broadcom TPU lease to Anthropic
Credit support comes from Google or an alternative provider; Oracle is named.
The filed wording
(a) In the event that a Landlord becomes the subject of a petition for relief under the Bankruptcy Code and rejects, pursuant to Section 365(a) of the Bankruptcy Code, a Data Center Lease to which such Landlord and a Lessee Tenant are parties, Lessee shall (or shall cause the applicable Lessee Tenant to), except if it otherwise receives Lessor’s prior written consent (including email), elect to retain its rights under the applicable Data Center Lease to the fullest extent permitted by Section 365(h)(1)(A)(ii) of the Bankruptcy Code. Any election by Lessee (or the applicable Lessee Tenant) to treat the Data Center Lease as terminated per Section 365(h)(1)(A)(i) of the Bankruptcy Code made without Lessor’s written consent shall be null and void ab initio.
Broadcom master equipment lease of Google TPU8i pods to an Anthropic subsidiary, section 9.07(a) · Anthropic S-1/A, Exhibit 10.11
Each extract is quoted from the contract as filed with the SEC, checked against the filed text when it was added; “…” marks words left out. Filers redact commercial terms, so a [***] or [*] is the filer's, not ours. The summaries describe the wording, not how a court would read it, and each contract's defined terms and other clauses can change the effect. General information drawn from public filings. It is not legal advice on any transaction, and using this page does not create a lawyer-client relationship. Views are personal.
InfraCompute Weekly
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Deals, terms and the clauses behind them, for the people financing data centres, GPU clouds and the power behind them. By Randeep Bubbra.
