Court Says ‘Stub Rent’ Is Administrative Claim Not Prepetition Unsecured Claim

The rent for the days after the debtor filed its Chapter 11 petition until the next lease payment is due is an administrative claim under Bankruptcy Code Section 365(d)(3) in a prorated amount of a full monthly lease payment, the U.S. Bankruptcy Court for the Central District of California July 9 held (In re The Leather Factory Inc, Bankr. C.D. Cal., 1:05-bk-18708, 7/9/12).

Following the majority of courts that follow the accrual method rather than the billing approach, Judge Geraldine Mund concluded that to rule otherwise would “reward the estate to the detriment of the landlord, ...