In re Klein Sleep Products
United States Court of Appeals for the Second Circuit
78 F.3d 18 (1996)
Klein Sleep Products (Klein) assumed an existing retail lease with landlord Nostas Associates (Nostas) (plaintiff) after filing Chapter 11, paying rent through October 1992 before its reorganization began failing; a Chapter 11 trustee (defendant) was appointed, rejected the lease, and surrendered the property. Nostas sought both pre-rejection arrearages and future rent as priority administrative expenses, but the trustee objected; the bankruptcy court and district court limited Nostas's post-rejection recovery to one year of rent under 11 U.S.C. §502(b)(6), reasoning post-rejection claims deserve administrative priority only if they benefit the estate, and Nostas appealed.
Whether a landlord's claim for future rent, arising from a lease the debtor-in-possession had assumed and later rejected, is entitled to full administrative priority uncapped by the statutory limitation that otherwise applies to claims from unassumed leases.