Landlord Denied Administrative Claim for Bankrupt Tenant’s Removal of Property

Faegre Drinker co-chair Andrew Kassner and counsel Joseph Argentina coauthored an article for The Legal Intelligencer, titled “Landlord Denied Administrative Claim for Bankrupt Tenant’s Removal of Property.”

The article reviews a dispute where a retailer filed Chapter 11 cases and conducted liquidation sales across multiple locations under the supervision of the bankruptcy court, which entered orders authorizing procedures for the sales and rejecting the underlying leases. The landlord filed a motion seeking allowance of an administrative claim in the debtors’ bankruptcy cases, alleging the debtors violated the court’s orders by removing property that belonged to the landlord or was not “movable” as required by the orders, converting the landlord’s property, negligently causing damage to the store property and breaching the terms of the lease prior to rejection.

Kassner and Argentina discuss the U.S. Bankruptcy Court for the District of Delaware’s denial of the landlord’s motion and ruling that the removal of fixtures and alleged resulting property damage did not give rise to an administrative claim for the landlord. The authors note that the case is a reminder that courts will look to the lease documents and state law to adjudicate the landlord’s rights.