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7. Consequences of Rejection.
Two lines of authority govern the effective date of rejection. The "majority view" fords that rejection is effective upon entry of a court order approving rejection by the trustee or debtor. Another view treats rejection of the lease as effective upon filing the motion, assuming the court concurs. The First and Ninth Circuits state the majority view, that rejection of the lease is effective upon court approval, which is a condition precedent. Both circuits recognize that the court has "equitable power, in suitable cases, to order a rejection to operate retroactively." The Ninth Circuit rejected the proposition that the landlord's possession of the property is a condition of granting retroactive rejection of the lease. The Circuit did assert, however, that in the ordinary case § 365(d)(3) requires payment of administrative rent between the time the trustee decides to reject and the delivery of possession of the premises to the landlord. In approving the retroactive rejection, the court focused on the fact that the debtor promptly filed the rejection motion and sought a prompt hearing, never occupied the premises and the landlord was only trying to maximize rent rather than seek recovery for real damages. In a case where the rejection decision was made during the bankruptcy case, the bankruptcy court did not abuse its discretion in allowing the debtor to retroactively reject the lease as of the date that the motion, to reject was filed, rather than the date that the motion was granted. In an airline case where delaying the date of rejection after 60 days after the order for relief could cost the estate substantially, the court authorized a procedure for rejection on 3 days notice, subject to the nondebtor party's subsequent objection.
A Texas court looked to the equities of the case, including whether the debtor had relinquished
