In Re Goody’s Family Clothing, Inc.
United States Court of Appeals for the Third Circuit
610 F.3d 812 (2010)
- Written by Rose VanHofwegen, JD
Facts
Goody’s Family Clothing, Inc. (debtor) leased space for its stores and paid rent by the first of every month until June 1, 2008, when it did not pay any rent. Goody’s filed bankruptcy eight days later. Goody’s closed some stores and hired an agent to liquidate merchandise by conducting sales directly in the stores that were closing. Goody’s said the sales were “pretty successful” and recouped 105 percent of its costs. The agent also paid Goody’s daily rent to use the store premises for the closing sales. Goody’s paid the landlords rent for July on July 1 but did not pay the rent due for the “stub rent” period from June 8–30. The landlords filed claims characterizing the stub rent as an administrative expense. Goody’s objected, arguing the rent was due before the petition date, making it a general unsecured claim. The bankruptcy court treated the stub rent as administrative expense, and the district court affirmed. Goody’s appealed.
Rule of Law
Issue
Holding and Reasoning (Ambro, J.)
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