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The Leasing Hotline
Prorated Rent in Bankruptcy
A tenant is obligated to pay rent in the month it filed for bankruptcy to cover the post-petition, pre rejection period, regardless of the date that the rent was billed under the terms of the lease. In re Elizabethtown Family Care Clinic, LLC, Case NO. 08-31544(1)(7), Dec. 18, 2008.
The tenant (debtor), a medical office, and landlord entered into a lease agreement for a term of three years. Thereafter, the tenant defaulted on the lease and filed a voluntary petition under Chapter 7 of the Bankruptcy Code. The landlord filed a motion seeking administrative expenses under 11 USC ' 503(b)(1)(A). Although the parties agreed that the landlord was entitled to an administrative claim, the amount of the claim was in dispute. The trustee, on behalf of the debtor, argued that the amount of rent should have been prorated for the month that the debtor filed its bankruptcy claim. The court agreed. It held that a debtor's obligation under a lease should be prorated to cover the post-petition, pre-rejection period, regardless of the date that the rent was billed under the lease.
Prorated Rent in Bankruptcy
A tenant is obligated to pay rent in the month it filed for bankruptcy to cover the post-petition, pre rejection period, regardless of the date that the rent was billed under the terms of the lease. In re Elizabethtown Family Care Clinic, LLC, Case NO. 08-31544(1)(7), Dec. 18, 2008.
The tenant (debtor), a medical office, and landlord entered into a lease agreement for a term of three years. Thereafter, the tenant defaulted on the lease and filed a voluntary petition under Chapter 7 of the Bankruptcy Code. The landlord filed a motion seeking administrative expenses under 11 USC ' 503(b)(1)(A). Although the parties agreed that the landlord was entitled to an administrative claim, the amount of the claim was in dispute. The trustee, on behalf of the debtor, argued that the amount of rent should have been prorated for the month that the debtor filed its bankruptcy claim. The court agreed. It held that a debtor's obligation under a lease should be prorated to cover the post-petition, pre-rejection period, regardless of the date that the rent was billed under the lease.
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