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the lease, then the landlord can file a   after the commencement of the case.”   Read the Confirmation Order
        claim for the rent that is owed. Section   11 U.S.C. § 503(b)(1)(A). These costs   After filing bankruptcy, the
        365(a) treats rejected leases as breach-  and expenses include post-petition   debtor will submit a Plan of Reorga-
        es of a lease before bankruptcy; claims   rent. These costs are necessary to the   nization (“Plan”) and a Disclosure
        are normally considered pre-petition   preservation of the estate; and are   Statement. The debtor’s prospective
        claims for rent. The rejection amount   paid before unsecured claims, such as   Plan should address which leases
        of the claim is capped by Section   proofs of claim that deal with pre-peti-  it will assume or reject, or when
        502(b)(6)(b). It allows for the greater   tion rejected leases' rental expenses.   creditors can expect the debtor to
        amount of rent owed for one year or
        15% of the rent not to exceed 3 years
        following the filing of the bankrupt-
        cy. Additionally, most courts man-
        date that the landlord subtract the
        security deposit from the calculation.

        Retroactive Rejection
           Landlords may claim post-petition
        rent as an administrative claim. This       EMPLOYER
        would mean the landlord would at            BENEFIT SERVICES
        least be paid in full for the rent it
        was owed between the date the bank-
        ruptcy case was filed and the date
        the lease was rejected. It is becoming
        more common for debtors to ask that
        a lease be rejected retroactively to the
        bankruptcy filing date. Additionally,
        debtors have also been moving more
        quickly to reject leases.                         PLAN              PAYROLL            BENEFIT
           By rejecting the abandoned leases         ADMINISTRATON       MANAGEMENT            PACKAGE
        on the petition date, the debtor is          Assistance and research   Get your employees   MARKETING
        relieved of any post-petition adminis-        to keep you informed   paid quickly so you   Document
        trative expense claims by landlords.         and in compliance with   can get back to doing   administration of
                                                     state and federal laws.
                                                                         what your company
                                                                                             401(k) and 403(b)
        The debtor's quick rejection also                                    does best.      including employee
        means he/she does not have to pay                                                   enrollment assistance.
        the landlord his/her monthly rent
        under Section 365(d)(3). Unfortu-
        nately, when that occurs, landlords
        have little to no recourse.
           However, the longer a debtor
        waits in a bankruptcy case, the more
        unlikely it will be that a bankruptcy
        court will grant this retroactive
        relief. Moreover, in cases where the             CLAIMS             HUMAN              BENEFITS
        debtor is actively using the space            MANAGEMENT          RESOURCES        EDUCATION AND
        and that use is either generating               When a claim is   CONSULTING         CONSULTING
        income or providing a benefit to              made, we assist in the   Develop policies and   Craft a competitive

        the estate, it will be hard-pressed           process, from the first   procedures, address   employee benefits plan
                                                                                             to recruit and retain
                                                                         recruiting strategies,
        to convince a court that retroactive         filing of the claim to its   develop job descriptions.  valuable employees.
        rejection is advisable.
        What are Administrative
        Claims, exactly?                                                        PUTTING ALL THE HEALTHCARE
           Section 503(b)(1)(A) of the Bank-                                         BENEFIT PIECES TOGETHER
        ruptcy Code, states that adminis-                                        OFFICE       ONLINE
        trative status of claims is allowed                                      713-647-9700
        for “the actual, necessary costs and
        expenses of preserving the estate...

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