Document Type
Research Memorandum
Publication Date
2026
Abstract
(Excerpt)
Courts are divided on whether landlords are entitled to immediate payment of this rent obligation under 11 U.S.C. § 365(d)(3) or must seek recovery through administrative expense claims under 11 U.S.C. § 503(b)(1). The majority of circuit courts, including the Third, Sixth, and Seventh Circuits, follow the billing date approach, holding that rent obligations arise when due under the lease, meaning that rent due on the first of the month arises entirely pre-petition if the bankruptcy filing occurs later in the month. Under this approach, landlords are not entitled to prompt payment of stub rent under § 365(d)(3). They must instead pursue administrative expense claims under § 503(b)(1), which require proof that the debtor’s post-petition occupancy provided an actual benefit to the estate. On the other hand, the minority proration approach followed by the Tenth Circuit allocates rent based on the debtor’s actual post-petition occupancy and automatically allows landlords to recover stub rent as an administrative expense. Courts within New York have issued conflicting rulings, creating uncertainty for landlords and debtors.