  |
  |
  |
    
  
   |
 | |||
|
|
|
|
| |||
The current obligation requirement also means, for some courts, that the postpetition rent is all entitled to administrative priority in the contract amount, rather than being limited to the value to the estate by virtue of § 503(b)(1). This has also led to an argument, rejected by a majority of the courts, that it creates a "superpriority" for such rent obligations, but this issue really comes to a head only in administratively insolvent cases.
B. Extension of Time to Assume or Reject
Pre-BAPCPA, the Code required debtors to assume or reject nonresidential real property leases within 60 days of the petition, unless the court extended that time. Most chapter 11 debtors are not in a position, within 60 days of the commencement of the case, to determine whether to assume or reject all their leases. This is particularly true with large chains that have operating stores on leased property throughout a large region or the whole country, some of which are well worth saving and some of which ultimately should be jettisoned. Consequently within 60 days the debtor should file a motion to extend the time within which to assume or reject these leases. Although the Code's language rather clearly seems to indicate the court must enter the order granting an extension within that 60 day time period, at least the Ninth Circuit has held that it is sufficient that the motion is filed within that time period, and the court may grant it later. It has also held that § 365(d)(4) does not limit the debtor to only one motion for extension. By local rule, Delaware has provided that if a motion to extend time is filed prior to the expiration of that time, the time is automatically extended until the court acts on the motion, and a bridge order is not necessary. DLR 9006-2.
BAPCPA changed much of this law. Post-BAPCPA, amended Code § 365(d)(4) requires debtors to assume or reject nonresidential real property leases within 120 days of the petition. More importantly, however, new § 365(d)(4)(B) provides that that period may only be extended for 90 days (unless the lessor consents to further extension), and such extension must be granted prior to expiration of the initial 120-day period.
Pre-BAPCPA courts had identified various factors that must be considered in deciding a motion to extend the time to assume or reject. Landlord objections to long or omnibus extensions may be repeated in the context of considering the 90 day extension, or may not be heard again at all.
At least one circuit has held that it is not necessary for a debtor to come current on a lease before the court may enter an order for an extension of time to assume, and another has held that a debtor need not cure prepetition defaults in order to exercise a renewal option prior to assumption of the lease.
X. EXTENSIONS OF EXCLUSIVITY
In many large chapter 11 cases, within about 90 days of the filing the debtor will want to move to extend its exclusive right to file a plan of reorganization under Code §
