24 B 1529
Debtors filed for relief under chapter 11 on the second day of the month.  They had not paid the rent for several nonresidential real property leases that came due on the first day of the month.  Eventually, the landlords filed applications for administrative expense claims.  Among other requests, the landlords sought administrative expense priority for the “stub period” rent that accrued between the petition date and the next due date.  HELD: In the Seventh Circuit, 11 U.S.C. § 365(d)(3), which requires timely payment of all obligations under an unexpired lease of nonresidential real property, does not require payment of stub period rent.  This does not preclude landlords from seeking administrative expense priority for stub period rent under 11 U.S.C. § 503(b)(1).  Seventh Circuit authority requires a transaction with the debtor-in-possession and a benefit to the estate for a claim to qualify for administrative expense status under § 503(b)(1).  The key issue in this case was whether there was a transaction with the debtor-in-possession.  The court found that there was.  First, section 365 codifies the transactional relationship, and thus the transaction, between a landlord and the debtor-in-possession.  Second, the facts of this case showed that the Debtors induced the landlords to perform under the leases after the petition date.  Although inducement is additional evidence of a transaction with the debtor-in-possession, it is not necessary to that finding.  Obligations remained with both parties postpetition and arose under the operation of the Bankruptcy Code.  Finally, the concept of fairness to all persons having claims against a debtor, as described by the Supreme Court, supports a finding that the stub period rent is entitled to administrative expense priority.