Legal Question in Bankruptcy in Virginia

bankrupcty administrative expenses

I'm a small creditor in a bankruptcy proceeding. The debtor defaulted on his commercial lease, leaving unpaid debts to vendors and the landlord, the largest creditor. A section 7 filing took place a few days after the lease was cancelled. The trustee had possession of the property for 45 days after the petition date until a public auction was held. Now the landlord has requested an administrative expense claim for those 45 days, citing In re Williams Contract Furniture. If approved, this priority claim will leave nothing for the other unsecured creditors. Do I have any argument against this? I�d like to argue that rent owed pre- and post-petition have equal priority.


Asked on 11/05/07, 9:05 pm

1 Answer from Attorneys
Daniel Press Chung & Press, P.C.

Re: bankrupcty administrative expenses

The entitlement to an administrative priority claim for rent will depend on whether the use of the premises was to benefit the estate. Otherwise, the landlord is entitled only to a general unsecured claim for any pre-petition rent due, plus damages for the rejection of the lease, limited normally to one year's rent. In this case it may be entitled to administrative priority, as the space was kept for the purpose of auctioning assets, but there may be arguments against that. The problem is whether, as a small creditor, the benefit to you is worth the cost of opposing the administrative rent claim.

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Answered on 11/06/07, 8:20 am


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