443 B.R. 5
Bankr. D. Del.2010Background
- Goody's entered into HQ, DC, and Vacant Leases with SJW predecessor; tenants paid property taxes when due.
- Goody's I filed Chapter 11 on June 9, 2008; Cure Amount for SJW was fixed at $298,670 by Cure Order after Cure Motion.
- Leases were assumed and assigned to Goody's II on October 20, 2008, pursuant to the Plan and Cure Order.
- 2008 property tax bills were issued October 2, 2008; SJW sought cure/administrative treatment for 2008 taxes.
- Goody's I defaulted for nonpayment of 2008 taxes in October 2008; cure resolved defaults and assignment followed.
- Goody's II filed for Chapter 11 on January 13, 2009; 2009 taxes arose during post-petition occupancy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When did 2008 taxes become due? | SJW: taxes due Oct 1, 2008 under Tenn. law. | Goody's: due date disputed; Tennessee law ambiguous but due date later or ongoing. | Taxes arose October 1, 2008 |
| Is Debtor I liable for 2008 taxes? | SJW seeks Debtor I liability for 2008 taxes. | Debtor I liability wiped by Cure Order and assignment to Debtor II after cure. | Debtor I not liable for 2008 taxes |
| What is SJW's status for 2008 taxes against Debtor II? | SJW seeks 2008 taxes as general unsecured against Debtor II (DC/Vacant). | Debtor II liable; but defenses on administrative status debated for 2008 taxes. | General unsecured for 2008 taxes against Debtor II (DC/Vacant) |
| Are 2009 taxes administrative expenses for Debtor II? | SJW seeks 2009 HQ/DC taxes as administrative expenses. | Debtor II argues 2009 taxes are not admin; some portions may be admin under occupancy | Administrative expense for 2009 HQ and DC taxes; remaining 2009 taxes not admin |
| Was SJW's excusable neglect a valid basis to amend Cure? | SJW relied on excusable neglect to file late objections. | SJW failed to timely object; prejudice and delay harmed estate; neglect not excusable. | SJW excusable neglect claim denied |
Key Cases Cited
- In re Goody's Family Clothing, Inc., 392 B.R. 604 (Bankr.D.Del. 2008) (explains 365(d)(3) obligation timing and cure/assumption effects)
- In re Sportsman's Warehouse, 436 B.R. 308 (Bankr.D.Del. 2009) (post-petition use and occupancy as actual and necessary expenses; rent proxy)
- In re Wireless Data, Inc., 547 F.3d 484 (2d Cir. 2008) (cure/assumption framework and contract restoration purpose)
- In re Cellnet Data Systems, Inc., 313 B.R. 604 (Bankr.D.Del. 2004) (assumption effect and defaults pre-assignment)
- In re Garden Ridge Corp., 323 B.R. 136 (Bankr.D.Del. 2005) (reasonableness of administrative claim treatment and precedence)