Administrative Claim Is Not a Given or the Sole Remedy for Unpaid Post-Petition Rent Prior to Assumption or Rejection

In an article for The Legal Intelligencer, Andy Kassner and Joe Argentina discuss how the Bankruptcy Code provides that trustees and debtors-in-possession are required to perform all post-petition obligations arising under nonresidential leases.

Courts disagree on whether these post-petition lease claims automatically result in a per se administrative expense claim for unpaid rent and other lease charges. This issue was recently addressed by the U.S. Bankruptcy Court for the District of New Jersey in In re Jughandle Brewing, Case No. 23-15703 (CMG) (June 3, 2024). 

The authors analyze the case and the court’s decision in the article. The decision reminds landlords that if the landlord desires to request post-petition rent and enforcement of other terms of the lease, they should immediately make formal demand for rent and compliance, with specificity, and also consider filing a motion to compel assumption or rejection if the debtor or trustee does not respond promptly and the amounts at issue are material.

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