In re Pyxsys Corp.

Pyxsys Corporation (Pyxsys) (debtor) leased commercial real estate from Cummings Properties, LLC (CPL). Under the 2002 lease, Pyxsys owed CPL monthly rent of $8,891.05. An involuntary bankruptcy proceeding was commenced against Pyxsys on January 18, 2002, and the bankruptcy court entered an order for relief on February 5, 2002. The bankruptcy trustee did not formally assume or reject the CPL lease or make any postpetition rental payments. Therefore, under 11 U.S.C. § 365(d)(4), the lease was deemed automatically rejected 60 days later, on April 6, 2002. Following the rejection, some of Pyxsys’s assets were stored at the property until the trustee sold them. The property was fully vacated on May 6, 2002. CPL moved for immediate payment of $17,782.10 in postpetition rent that had accrued before rejection of the lease and $8,891.05 in postrejection use-and-occupancy charges for the asset storage. CPL claimed that immediate rent payment was appropriate under 11 U.S.C. § 365(d)(3), which required the trustee to timely perform all obligations under the lease. CPL further argued that the storage claim was immediately payable because, by storing estate assets until the trustee could sell them, CPL had incurred a loss preserving the estate that was payable as an administrative expense under 11 U.S.C. § 503(b)(1)(A). The trustee objected, asserting that payment should be made only after a final determination that the estate was administratively solvent (i.e., had enough funds to pay all administrative creditors in full). Although the estate faced some litigation and winding-up expenses, no evidence cast doubt on the solvency of the estate. The estate had $75,000 in assets and under $30,000 in other administrative expenses.