In Re Klein Sleep Products, Inc.

78 F.3d 18 (1996)

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Nature of the Case

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Facts

In bankruptcy, Klein Sleep (P) assumed, with court approval, the unexpired lease it had with D. Eighteen months later, it became apparent that the reorganization had failed. The newly appointed bankruptcy trustee decided to 'reject' the lease. D then sought to recover the future rent that was due under the lease. D argued P's court-approved lease assumption converted all liability under the lease into administrative expenses that warrant a first priority in repayment under § 507(a)(1). D seeks administrative expense status for rent arrearages from November 1992 through January 1993, for future rent accruing after January 1993, and for attorneys' and brokers' fees incurred in connection with reletting the space. The bankruptcy court held, and the district court affirmed, that D was entitled to recover as an administrative expense only the rent that had come due before the trustee rejected the lease. D could still recover as a general unsecured claim only one-year’s worth of the rent (§ 502(b)(6)) coming due after rejection. D appealed.